82,891
edits
Exposure: Difference between revisions
no edit summary
Amwelladmin (talk | contribs) No edit summary |
Amwelladmin (talk | contribs) No edit summary |
||
| Line 1: | Line 1: | ||
{{g}}Your “[[exposure]]” to a [[counterparty]] is the amount that your [[counterparty]] would owe you if you [[closed out]] the transaction today — the [[replacement value]] of the transaction, so to say. | {{g}}Your “[[exposure]]” to a [[counterparty]] is the amount that your [[counterparty]] would owe you if you [[closed out]] the transaction today — the [[replacement value]] of the transaction, so to say. Exposure is primarily a measure of [[credit risk]]. One’s ''existing'' [[exposure]] and can be offset by [[variation margin]]; ones potential exposure between now and when one can next ask for more [[variation margin]] can be covered by [[initial margin]]. | ||
The flip side of the exposure card is the funding of ones exposure. Here you want to be able to deal with your collateral. If you received it by title transfer, all well and good: it is yours to monetise. If you received it by [[pledge]] or other [[security interest]], you may well want a right to “[[reuse]]” or, as our American friends like to say, “[[rehypothecate]]” it. | |||
{{sa}} | {{sa}} | ||
*[[Mark-to-market]] | *[[Mark-to-market]] | ||
*[[Present value]] | *[[Present value]] | ||
*[[Rehypothecation]] | *[[Rehypothecation]] | ||