Template:Csa Other Posted Support summ

Other Eligible Support

This is generally going to be Credit Support in a format that is not a transferable financial instrument: Guarantees, letters of credit, Keep Well letters, that kind of thing. In the ordinary cut and thrust of collateral terms, this will not be common, because (a) it is a faff, and (b) a dealer cannot generally rehypothecate it, and therefore raise cash or cash-like assets against it to defray the funding costs of providing derivative exposure.

Dealers generally won’t like {{{{{1}}}|Other Posted Support}}, won’t specify much of it in your Elections schedule, and will (rightly) charge customers who insist on providing it more, because their own internal funding costs will be higher.

Other Eligible Support will generally function as a static {{{{{1}}}|Independent Amount}} rather than variation margin.

Less of an issue in the 2016 VM CSA world as {{{{{1}}}|Credit Support}} is generally assumed to be cash, and generally less of a thing in the modern world, because initial margin tends to be more dynamic and Transaction specific than was originally contemplated. These are impressionistic beliefs and no doubt someone will correct me.

Other Posted Support

{{{{{1}}}|Other Posted Support}} is to {{{{{1}}}|Other Eligible Support}} as {{{{{1}}}|Posted Collateral}} is to {{{{{1}}}|Eligible Collateral}}: Other Eligible Support provides the universe of allowed forms of non Collateral that can be provided as {{{{{1}}}|Credit Support}} under the CSA; {{{{{1}}}|Other Posted Support}} means the heavenly bodies in that universe that have actually been preferred as {{{{{1}}}|Credit Support}}.

What is this alternative universe, then, and why is it different to {{{{{1}}}|Posted Collateral}}? Well, we think it is things that are not readily transferable, negotiable instruments, but nonetheless function as a credit mitigant. We discuss some candidates in the premium content section.