
Collateral
Initial margin obligations at the clearing house can be covered in
various ways. Collateral in the form of cash in the currencies of the
contracts traded is most commonly used. In addition bank guaran-
tees, government treasury bonds and bills, certificates of deposits and
certain equities are accepted at the London Clearing House, for
example. Each clearing house or exchange will publish the collateral
that they accept. LCH has quite a wide range but some markets
accept cash only in their domestic currency.
It is possible to use a combination of cash and physical collateral in
some markets. For 10-year Japanese Government Bond Futures in