Exchange traded derivatives collateral

Understand the similarities & differences between exchange traded and OTC derivatives; Identify the processing lifecycle of a range of OTC derivative products; Understand the purpose of collateral in the management of OTC derivative trades; Appreciate each step in daily counterparty risk mitigation within the collateral process Derivatives Derivatives are financial contracts that are traded on organized exchanges or in the over-the-counter (OTC) market—a decentralized market model where market participants find other market participants to trade with. As is the case with derivatives in general, futures and options derive their value from the current or expected Margin trading, at its core is a risk management procedure. Since most of the contracts pertaining to exchange traded derivatives are highly leveraged, a margin procedure is required. It allows the investor to borrow money from the market and invest this borrowed money.

Understand the similarities & differences between exchange traded and OTC derivatives; Identify the processing lifecycle of a range of OTC derivative products; Understand the purpose of collateral in the management of OTC derivative trades; Appreciate each step in daily counterparty risk mitigation within the collateral process Derivatives Derivatives are financial contracts that are traded on organized exchanges or in the over-the-counter (OTC) market—a decentralized market model where market participants find other market participants to trade with. As is the case with derivatives in general, futures and options derive their value from the current or expected Margin trading, at its core is a risk management procedure. Since most of the contracts pertaining to exchange traded derivatives are highly leveraged, a margin procedure is required. It allows the investor to borrow money from the market and invest this borrowed money. The training course is designed to provide a thorough understanding of a range of OTC derivative products and the specific sequential steps in their processing. Extending the concepts relating to the product, the principles of collateral and of collateral management are described to a detailed level. Such programs include securities operations (incorporating the trade lifecycle), repos and related collateral, securities lending & borrowing and related collateral, corporate actions (fundamental and intermediate), derivative operations (exchange-traded derivatives, OTC derivatives (including CDS & IRS) and related collateral) and related For exchange-traded derivative contracts there may be multiple instances for delivery of cash or securities between the parties during the life of the transaction. This then requires repeated instances of the clearing and settlement process. For more information on settlement, see: Settlement of derivatives—overview.

3.2.3 Collateralization of bilateral exposures, ideally by third-party collateral managers. 25 Exchange-traded derivatives are fully standardized whereas most 

Nowadays, many types of derivative products are traded and settled directly between one party and its counterparty on an Over-the-Counter (OTC) basis. For each product, its purpose and possible outcomes must be well understood by operations and other personnel within financial institutions, so as to provide top quality servicing of clients and to avoid processing losses. Exchange-traded products often use collateral to offset counterparty exposures. But what is the collateral, and how should it be assessed? If you invest in a swap-based ETF, an ETF that lends out its underlying shares, or in any other tracker product that backs its return with a basket of assets, Centrally cleared trades and exchange traded derivatives (ETDs) require both parties to transfer initial margin, in either cash or treasury bonds, and exchange cash variation margin on a daily basis without any minimum transfer amounts. This has significantly increased the frequency of margin calls, with some firms reporting a 5 to 20% increase. The training course is designed to provide a thorough understanding of a range of OTC derivative products and the specific sequential steps in their processing. Extending the concepts relating to the product, the principles of collateral and of collateral management are described to a detailed level. For Exchange Traded Derivatives (ETD), this is normally 2 days. The Initial Margin algorithms employed by all the CCPs are portfolio based, meaning that hey look at all the positions and calculate a margin requirement for the total portfolio, taking into account offsets between different contracts and products. • What constitutes collateral in financial markets • Collateral management since the banking crisis • Leverage and the Basel Accord • How leverage is used, its benefits and its risks • Products supported by collateral • Exchange traded derivatives and collateral • OTC derivatives collateral Collateral Usage

For Exchange Traded Derivatives (ETD), this is normally 2 days. The Initial Margin algorithms employed by all the CCPs are portfolio based, meaning that hey look at all the positions and calculate a margin requirement for the total portfolio, taking into account offsets between different contracts and products.

10 Jan 2019 margin calls and collateral estimates between counterparties on the IMS for over-the-counter (OTC) and exchange-traded derivatives through  Reference data for exchange traded derivatives provides a comprehensive set of data for products traded and cleared on ICE global exchanges and clearing  The CFTC proposed revisions to swaps processing and reporting (Section 21 of the CEA (Commodity Exchange Act). The goals of Dodd-Frank are to make the  15 Dec 2016 Collateral imperfections: the CVA cover the expected exposure in the The Margin period of risk: Also, when computing the CVA, you are  An exchange traded derivative is a financial contract that is listed and trades on a regulated exchange. Simply put, these are derivatives that are traded in a regulated fashion. Understand the similarities & differences between exchange traded and OTC derivatives; Identify the processing lifecycle of a range of OTC derivative products; Understand the purpose of collateral in the management of OTC derivative trades; Appreciate each step in daily counterparty risk mitigation within the collateral process

15 Dec 2016 Collateral imperfections: the CVA cover the expected exposure in the The Margin period of risk: Also, when computing the CVA, you are 

Collateral is not segregated at the individual client account level and therefore collateral held by the clearing house in excess of the initial margin requirement with  Several signs point to a wider adoption of ETF collateral, even though some on posted as collateral in cleared trades as well as exchange-traded derivatives,  exchange traded derivatives (ETDs) and suggests alternative solutions which will margin/collateral changes given that these take place at position level. Exchange-Traded Derivatives (ETDs): Standardised contracts traded on a Typically derivatives contracts also carry collateral requirements to manage  Derivatives (ETD) offered by Erste Group Bank AG (EGB) (“EU CCP”), i.e. a clearing obligation for exchange traded derivatives. (ETDs). for your account or on your behalf and, where applicable, authorize and agree to use such collateral. out netting, and treatment of collateral. The following note discusses the between usage of OTC and exchange traded derivatives. Of the 500 companies  3.2.3 Collateralization of bilateral exposures, ideally by third-party collateral managers. 25 Exchange-traded derivatives are fully standardized whereas most 

Derivatives (ETD) offered by Erste Group Bank AG (EGB) (“EU CCP”), i.e. a clearing obligation for exchange traded derivatives. (ETDs). for your account or on your behalf and, where applicable, authorize and agree to use such collateral.

Collateral is not segregated at the individual client account level and therefore collateral held by the clearing house in excess of the initial margin requirement with 

Derivatives (ETD) offered by Erste Group Bank AG (EGB) (“EU CCP”), i.e. a clearing obligation for exchange traded derivatives. (ETDs). for your account or on your behalf and, where applicable, authorize and agree to use such collateral. out netting, and treatment of collateral. The following note discusses the between usage of OTC and exchange traded derivatives. Of the 500 companies  3.2.3 Collateralization of bilateral exposures, ideally by third-party collateral managers. 25 Exchange-traded derivatives are fully standardized whereas most  Registered Customers and Specified Clients active in Eurex Exchange Traded Derivatives Eurex ETD) only or in both Eurex ETD and OTC Interest. Rate Swap