Margin - GMSLA Provision: Difference between revisions
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====Commentary==== | ====Commentary==== | ||
This is what other punters like to call the haircut, and even through it is phrased in a similar way as an "extra", you should differentiate it from an {{csaprov|Independent Amount}} under an {{isdama}} or [[initial margin]] under an ETD agreement: This is more like a {{csaprov|Valuation Percentage}}. | This is what other punters like to call the [[haircut]], and even through it is phrased in a similar way as an "extra", you should differentiate it from an {{csaprov|Independent Amount}} under an {{isdama}} or [[initial margin]] under an ETD agreement: This is more like a {{csaprov|Valuation Percentage}}. | ||
The difference is that this {{gmslaprov|Margin}} percentage is a function of the type of {{gmslaprov|Collateral}} posted, and it is a deduction from the value of that Collateral, whereas a conventional initial margin is a function of the transaction exposure, and is an addition to the liability that the party is collateralizing. | The difference is that this {{gmslaprov|Margin}} percentage is a function of the type of {{gmslaprov|Collateral}} posted, and it is a deduction from the value of that Collateral, whereas a conventional initial margin is a function of the transaction exposure, and is an addition to the liability that the party is collateralizing. | ||