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 [[CRM technique]]s under the [[Standardised Approach to Credit Risk|Basel]] [https://www.bis.org/publ/bcbsca04.pfd Standardised Approach to Credit Risk] framework are  broken down as follows:
-*'''[[Title transfer collateral arrangement|Collateralised transactions]]''': A bank has a [[credit exposure]] which it hedges<ref>This is what it says, and I suppose it is true, even though “hedging” is a curious way of describing it</ref> [[in whole or in part]] by {{csaprov|collateral}} posted by a counterparty or a [[credit support provider]]. (Often there is no more than a fag paper between a [[TTCA]] and an on-balance sheet [[netting]] arrangement)<ref>In many cases (e.g. the {{isdama}} a collateral arrangement will be delivered under a “{{isdaprov|transaction}}”, and so will explicitly be a master netting arrangement</ref>.
+*'''[[Title transfer collateral arrangement|Collateralised transactions]]''': A bank has a [[credit exposure]] which it [[hedges]]<ref>This is what it says, and I suppose it is true, even though “[[hedging]]” is a curious way of describing it.</ref> [[in whole or in part]] by {{csaprov|collateral}} posted by a counterparty or a [[credit support provider]]. (Often there is no more than a fag paper between a [[TTCA]] and an on-balance sheet [[netting]] arrangement)<ref>In many cases (e.g. the {{isdama}} a collateral arrangement will be delivered under a “{{isdaprov|transaction}}”, and so will explicitly be a [[master netting agreement|master netting arrangement]].</ref>.
 *'''On-[[balance sheet]] {{tag|netting}}''': Legally enforceable [[close-out netting]] arrangements covering multiple transactions with offsetting [[mark-to-market]] values.
-*'''{{tag|Guarantee}}s and [[credit derivative]]s''': {{tag|Guarantees}} provided by third parties (whose [[credit risk]] isn't materially correlated to the counterparty’s) or {{tag|credit derivative}} transactions.
+*'''{{tag|Guarantee}}s and [[credit derivative]]s''': {{tag|Guarantee}}s provided by third parties (whose [[credit risk]] isn't materially correlated to the counterparty’s) or {{tag|credit derivative}} transactions.
 Now note a fundamental difference between legally enforceable {{tag|netting}} arrangements and [[Guarantees]]: In a netting arrangement the full value of the offsetting transaction fully and automatically cancels out the corresponding [[exposure]]. There are no contingencies.  By contrast, collateral arrangements that don’t amount to enforceable [[netting]] arrangements, [[guarantees]] and [[CDS]] transactions ''all depend for their effectiveness on the solvency of the person providing the credit mitigation'' – if the credit support provider fails, so does the credit mitigation and the exposure remains.
+===Credit risk ''mitigation'' against exposure ''negation'' ===
+Note the difference between [[CRM technique|techniques]] which mitigate a credit risk that you nonetheless have — as above — and those which negate the [[credit exposure]] in the first place.
-{{Box|
+So, ''par example'':
-===An Important point ===
+*A [[title-transfer collateral arrangement]] whereby a bank transfers {{tag|collateral}} to a counterparty outright may, as part of  a valid [[netting]] agreement, mitigate that collateral but it will leave an exposure for the return of any [[excess collateral]] should the MTM move (or any margin [[haircut]]); however
-Note the difference between [[CRM technique|techniques]] which mitigate a credit risk that you nonetheless have — as above — and those which negate the [[credit exposure]] in the first place. So, ''par example'':
+*A [[pledged collateral arrangement]] — at least [[to the exent]] that the bank doesn’t surrender legal title<ref>Do not get me started on [[rehypothecation]].</ref> to the collateral at all — will<ref>Assuming you get the legals right...</ref> leave the bank with ''no'' counterparty {{tag|credit exposure}} at all to the haircut or excess, seeing as it remains the bank’s, and if the counterparty goes [[bust]], the bank does not have to claim it from the counterparty’s insolvent estate.
-*a [[title-transfer collateral arrangement]] whereby a bank transfers {{tag|collateral}} to a counterparty outright may, as part of  a valid [[netting]] agreement, mitigate that collateral but will leave the bank with an exposure for the return of any [[excess collateral]] or [[haircut]]; however
-*transfer under a [[pledged collateral arrangement]] — at least [[to the exent]] that the bank doesn’t surrender legal title<ref>Do not get me started on [[rehypothecation]].</ref> to the collateral at all — will leave the bank with no counterparty {{tag|credit exposure}} at all to the haircut or excess, seeing as it is the bank’s, and if the counterparty goes [[bust]], the bank will be entitled to have it returned in full.
-}}