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The thing whihc, I think, causes all the confusion is the nature of payments under ''normal'' Transactions are deterministic and generally specified in the Confirmation, whereas whether you need to make a payment at all under a CSA on any day depends, and how much you need to pay, depends on quite a lot of things and you only find out at the last minute. Therefore CSA payments are due “a regular [[settlement cycle]] after they are called” — loosey goosey, right? — whereas normal swap payments are due (say) “on the 15th of March” | The thing whihc, I think, causes all the confusion is the nature of payments under ''normal'' Transactions are deterministic and generally specified in the Confirmation, whereas whether you need to make a payment at all under a CSA on any day depends, and how much you need to pay, depends on quite a lot of things and you only find out at the last minute. Therefore CSA payments are due “a regular [[settlement cycle]] after they are called” — loosey goosey, right? — whereas normal swap payments are due (say) “on the 15th of March” | ||
Day 1: Party A’s has an {{{{{1}}}|Exposure}} of 100, and its prevailing {{ | Day 1: Party A’s has an {{{{{1}}}|Exposure}} of 100, and its prevailing {{{{{1}}}|Credit Support Balance}} is 90, so (before the Notification Time on the Demand Date) Party B has called it for a Delivery Amount of 10, which it must pay but Party B owes it a payment of 10, which is due to land tomorrow. | ||
Fun times in the world of [[collateral]] [[operations]]. | Fun times in the world of [[collateral]] [[operations]]. |