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The point of this whole arrangement being to provide credit mitigation in the unusual event that the party to a derivative contract immolates unexpectedly. This collateral is not there to be optimised, reused, financed (as variation margin might be), since that would convert a credit mitigant in one direction to a credit liability in the other direction. The moment i reuse collateral you have given me, i have an unsecured debt claim to return it to you, for which you are my creditor. That is ''not'' the idea. | The point of this whole arrangement being to provide credit mitigation in the unusual event that the party to a derivative contract immolates unexpectedly. This collateral is not there to be optimised, reused, financed (as variation margin might be), since that would convert a credit mitigant in one direction to a credit liability in the other direction. The moment i reuse collateral you have given me, i have an unsecured debt claim to return it to you, for which you are my creditor. That is ''not'' the idea. | ||
Once the game is absolutely up, the {{isdama}} is closed out, the Early Termination Amount determined and the parties’ net liabilities to each other crystallised, ''then'' — assuming you are actually owed something by the bankrupt Counterparty — you can appropriate your Secured Property. Until then, hands off. | Once the game is absolutely up, the {{isdama}} is closed out, the {{isdaprov|Early Termination Amount}} determined and the parties’ net liabilities to each other crystallised, ''then'' — assuming you are actually owed something by the bankrupt Counterparty — you can appropriate your Secured Property. Until then, hands off. |