O'Reilly logo

Collateral Management by Michael Simmons

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

CHAPTER 36OTC Derivatives and Collateral – The Collateral Lifecycle – Throughout Lifetime of Trade – Holding Collateral

The figure shows the OTC derivative collateral lifecycle. It consists of a series of logical and sequential steps which should be experienced in order for a firm to process repo trades in a safe and secure fashion. The steps are as follows:
Step 1: Pre-Trading.
Step 2: Trading.
Step 3: Post-Trading.
Step 4: Throughout Lifetime of Trade. 
Step 5: Trade Termination.
This stage of diagram depicts the Throughout Lifetime of Trade.

36.1 INTRODUCTION

When a firm is in receipt of collateral (and in particular securities collateral), the way in which the firm holds such collateral can have significant implications.

Note that the primary focus of this chapter is on securities (primarily bond) collateral, which is fungible or interchangeable only within a specific securities issue or ISIN. Conversely, cash is regarded as fully fungible within a particular currency.

In order for the reader to be clear as to the role of each party, within this chapter the following terms will ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required