Template:Csa Eligible Collateral summ: Difference between revisions

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[[Eligible Collateral (VM) - NY VM CSA Provision|The]] kinds of collateral that you may exchange under a {{nyvmcsa}}. It looks like you can choose what you like, right, but CFTC rules in practice restrict it to cash in certain currencies. This is broadly analogous to what happens in Europe under [[EMIR]] and the other major regulatory regimes imposing margin requirements. You may wonder why regulatory VM is cash and regulatory IM is not, and premium subscribers can find out.
{{{{{1}}}|Eligible Collateral}} — with or without the (VM) suffix, and finding it tremendously irritating as he does, JC will largely go without — describes the kinds of collateral that you may deliver under your CSA and expect to be recognised for it.
In the [[ancient CSA]]s this is all very contractual and cash and a variety of types of corporate and government bonds might be acceptable; in the [[modern CSA]]s even though it looks like you can choose what you like, right, regulators’ rules, market conventions mean in practice variation margin is limited to cash in certain currencies. This makes a lot of the erstwhile complication and ''[[Ballschmerzen]]'' of CSA operations goes away.
 
{| class="wikitable" style="font-family: Helvetica; font-size: 80%; vertical-align: top; text-align: left;"
|+ Comparison of Eligible Collateral Types Across CSAs
! CSA Year !! Margin !! Gov. Law !! Holder !! Eligible Collateral
{{aligntop}}
| 1994 || IM and VM || NY || Other party || Cash, Government Securities, Investment Grade Corporate Debt
{{aligntop}}
| 1995 || IM and VM || English || Other party || Cash, Government Securities, Investment Grade Corporate Debt, Equities
{{aligntop}}
| 2016 || Reg VM and optional IM || NY || Other party || Cash only (in practice)
{{aligntop}}
| 2016 || Reg VM and optional IM || English || Other party || Cash only (in practice)
{{aligntop}}
| 2018 || Reg IM only || NY || Custodian || Cash, government bonds, corporate bonds
{{aligntop}}
| 2018 || Reg IM only || English || Custodian || Cash, government bonds, corporate bonds
|}
 
 
You may wonder why regulatory VM is cash and regulatory IM is not, and premium subscribers can find out.
====Initial  margin====
====Initial  margin====
For reasons best known to themselves there are curious rules in the US relating to initial margin which lead counterparties to use different ISDA CSA forms on different occasions. The details and variegation at play here — are you an SBSD counterparty? Are you subject to EMIR too? Is the AANA threshold met? — are all too ghastly for the JC to presently get into, other than to say the tiny peripheral benefits you get from gaming the fractal edges of the system of rules are most likely not worth it and it is probably better to have a single, maximally conservative, theory of the game: all that being well and good, of course, if your counterparties have a different view of the world, or a different idea what is the maximally conservative theory of the game.
For reasons best known to themselves there are curious rules in the US relating to initial margin which lead counterparties to use different ISDA CSA forms on different occasions. The details and variegation at play here — are you an SBSD counterparty? Are you subject to EMIR too? Is the AANA threshold met? — are all too ghastly for the JC to presently get into, other than to say the tiny peripheral benefits you get from gaming the fractal edges of the system of rules are most likely not worth it and it is probably better to have a single, maximally conservative, theory of the game: all that being well and good, of course, if your counterparties have a different view of the world, or a different idea what is the maximally conservative theory of the game.
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