Template:Csa IA Threshold MTA summ: Difference between revisions

These three levers do different things: {{{{{1}}}|Independent Amount}} is what is now colloquially referred to as [[initial margin]]: it is a buffer that just sits there for a rainy day. {{{{{1}}}|Threshold}} allows you to set a point where okay yes my credit people are now officially freaking out and you need to make them less freaky fast. So the {{{{{1}}}|Threshold}} will typically be a big number. You cross it once, and the CSA starts up. If you drop below it, the CSA stops again. If one or other party wishes to ''never'' post {{{{{1}}}|Credit Support}} (did happen, not really nowadays with regulatory VM, but there is the odd [[Non-financial counterparty|NFC]] in this bucket) you would set your {{{{{1}}}|Threshold}} at “Infinity”. The {{{{{1}}}|Minimum Transfer Amount}} is usually a small, round number (say USD1m, or USD5m) that reflects the fact that small movements in {{{{{1}}}|Exposure}} are not really worth getting your collateral ops steampunk machine fired up for.

====Isn’t Threshold something to do with Cross Default?====

A bit late now, however, but the JC thesaural service came up with “knock-in level”, or “floor”, or “gate”, or “trigger”, or “hurdle”. Or, yes, threshold.