Margin - GMSLA Provision: Difference between revisions

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.

That's not an entirely clear distinction, of course, in that the value of the {{gmslaprov|Collateral}} on any given day itself affects the {{gmslaprov|Market Value}} of the {{gmslaprov|Transaction}} itself, but it does so in an incidental way.