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{{csasnap|Equivalent Credit Support}} | {{csasnap|Equivalent Credit Support}} | ||
====Commentary==== | |||
'''Tricks for the young players''': “{{csaprov|Equivalent Credit Support}}” in meant only to capture assets which are [[fungible]] with assets forming part of posted {{csaprov|Credit Support Balance}} (exactly the same ISIN) – the point of “equivalence” is to buttress the {{CSA}}’s [[title transfer]] analysis by allowing return of a security which isn’t the exact security that was delivered in the first place, but another one from the same issue. | |||
If you had to redeliver the same one, the “transfer of title” is in danger of being [[recharacterised]] into a [[pledge]]/[[loan]], which has a bunch of unwanted knock-on effects. | |||
I have come across a couple of instances (in {{tag|OTC Clearing}}/{{tag|CCP}} space) where the {{tag|CSA}} definition of “{{csaprov|Equivalent Credit Support}}” has been modified to capture not just fungible securities of the same Series/[[ISIN]], but “similar ones” – same issuer but different maturity, and under a different ISIN etc. | |||
This may have been based on a misapprehension that “Equivalent Credit Support” is already intended to allow redelivery of non-fungible securities of a similar type, and the modification is only clarificatory. | |||
There may be a need for the “similar securities” concept in the [[OTC=>CCP]] space, but we should call it something else – perhaps “Similar Credit Support” – to differentiate it from “Equivalent Credit Support” which is still needed in the CSA to support the title transfer analysis. | |||
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