Margin - GMSLA Provision
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 Independent Amount under an ISDA Master Agreement or initial margin under an ETD agreement: This is more like a Valuation Percentage. The difference is that this Margin percentage is a function of the type of 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.
That's not an entirely clear distinction, of course, in that the value of the Collateral on any given day itself affects the Market Value of the Transaction itself, but it does so in an incidental way.
See Also
update to anat|gmsla
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