Template:Csa Interest Payment summ: Difference between revisions

But better still would be just straight out capitalising interest, with no option to transfer it. Perhaps this is just me.

It really ought to be quite simple, and in the {{csa}} it is: if a {{csaprov|Transferor}} has posted [[cash]] — probably less likely back in the day, but in the world of [[regulatory margin]], ''de rigueur'' nowadays — then you get [[interest]] on it — as long as paying interest wouldn’t, in itself, trigger a call for a further {{csaprov|Delivery Amount}} by the {{csaprov|Transferor}} — thus precipitating a (short) game of operational ping-pong between the two parties’ back office teams.   

But as we know, {{csaprov|Exposure}}s ''don’t'' just quietly sit there. If they did, there wouldn’t be any need for initial margin, and collecting even [[variation margin]] would be less fraught. So if the {{csaprov|Transferee}}’s {{csaprov|Exposure}} has increased, the arrival of that interest might serve to fill a hole in the existing coverage, in which case, why pay it away only to ask for it back again?  

But in the {{vmcsa}} things get a little more complex. There follows an excruciating torture session for innocent and well-loved members of her majesty’s vocabulary, and all to get across a simple point.  In the nutshell to the right I have tried to simplify the drafting but I am a bit jet-lagged and it is testing even my patience. But know this: {{vmcsaprov|Interest Payment}} is a fiddly, time-and resource-consuming pain which will inevitably lead to error, confusion and name-calling. {{vmcsaprov|Interest Adjustment}} — just adding accrued interest to your {{vmcsaprov|Credit Support Balance}} — is far simpler and more elegant: none of this Kafkaesque complexity for netting and offsetting individual payments. It all comes out in the wash.