Template:Csa Exposure summ: Difference between revisions
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So, a scenario to illustrate: | So, a scenario to illustrate: | ||
{{quote| | {{quote| | ||
''Day 1'': Party A has an {{{{{1}}}|Exposure}} — is out of the money — to the tune of 100. Its prevailing {{{{{1}}}|Credit Support Balance}} is 90, so (let’s say, for fun, ''after'' the {{{{{1}}}|Notification Time}} on the {{{{{1}}}|Demand Date}}) Party B has called it for a {{{{{1}}}|Delivery Amount}} of a further 10, which it must pay, but not until tomorrow. | |||
''Day 1'': Party A has an {{{{{1}}}|Exposure}} — is out of the money — to the tune of 100. Its prevailing {{{{{1}}}|Credit Support Balance}} is 90, so (let’s say, for fun, ''after'' the {{{{{1}}}|Notification Time}} on the {{{{{1}}}|Demand Date}}) Party B has called it for a {{{{{1}}}|Delivery Amount}} of a further 10, which it must pay, but not until tomorrow. | |||
''Day 2'': Meanwhile, Party A has a {{isdaprov|Transaction}} payment of 10 that falls due to Party B, also tomorrow. The arrival of this payment will change Party A’s Exposure to Party B so it is 90. Assuming Party A also pays the Delivery Amount, by knock-off time tomorrow it will have posted a {{{{{1}}}|Credit Support Balance}} of 100, and its Exposure to Party B will only be 90. This means it will be entitled to call Party B for a {{{{{1}}}|Return Amount}} of 10. | ''Day 2'': Meanwhile, Party A has a {{isdaprov|Transaction}} payment of 10 that falls due to Party B, also tomorrow. The arrival of this payment will change Party A’s Exposure to Party B so it is 90. Assuming Party A also pays the Delivery Amount, by knock-off time tomorrow it will have posted a {{{{{1}}}|Credit Support Balance}} of 100, and its Exposure to Party B will only be 90. This means it will be entitled to call Party B for a {{{{{1}}}|Return Amount}} of 10.}} | ||
This seems rather a waste of operational effort, and will also take years off your credit officer’s life and may even cause his hair to catch fire. Can Party A just ''not'' pay the further Delivery Acount in anticipation of what will happen tomorrow? | This seems rather a waste of operational effort, and will also take years off your credit officer’s life and may even cause his hair to catch fire. Can Party A just ''not'' pay the further Delivery Acount in anticipation of what will happen tomorrow? |