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Counterparty credit risk: Difference between revisions
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→Section II: Scope of Application
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*Collateral may be used to mitigate risk exposure and is inherent in the nature of some transactions. | *Collateral may be used to mitigate risk exposure and is inherent in the nature of some transactions. | ||
*Short-term financing may be a primary objective in that the transactions mostly consist of an exchange of one asset for another (cash or securities) for a relatively short period of time, usually for the business purpose of financing. '''''The two sides of the transactions are not the result of separate decisions but form an indivisible | *Short-term financing may be a primary objective in that the transactions mostly consist of an exchange of one asset for another (cash or securities) for a relatively short period of time, usually for the business purpose of financing. '''''The two sides of the transactions are not the result of separate decisions but form an indivisible whole to accomplish a defined objective'''''. | ||
whole to accomplish a defined objective'''''. | |||
*Netting may be used to mitigate the risk. | *Netting may be used to mitigate the risk. | ||
*Positions are frequently valued (most commonly on a daily basis), according to market variables. | *Positions are frequently valued (most commonly on a daily basis), according to market variables. | ||