Page 31 - PRIAA Glossary

COLLATERAL ALLOCATION
A process whereby available collateral in an institution is allocated to business units or concrete businesses. Due to collateral transfer pricing (cost of collateral), the process has a significant impact on profitability of a certain business.
COLLATERAL CALL
The process by which a demand for margin/collateral is issued to a counterparty following the calculation of the collateral requirement. Collateral requirements are usually calculated on a daily basis.
COLLATERAL CRUNCH
A situation where the supply of collateral is insufficient
to cover collateral demand. Thus, collateral becomes expensive and a general shortage for market participants.
COLLATERAL DISPUTE
The process by which a counterparty disputes a collateral call.
COLLATERAL IN TRANSIT (PENDING MOVE)
Collateral that has been instructed to be transferred but has not yet settled. For the purposes of the margin call calculation, pending collateral moves are considered to have settled.
COLLATERAL INSTRUCT
A message, generally sent electronically in SWIFT format, to pledge or release collateral from a collateral account for fulfilling an agreed margin call.
COLLATERAL MANAGEMENT SYSTEM (CMS)
The software used to manage collateral obligations
and bookings of received collateral. Thereby, the collateral management system has several functions such as valuations, reconciliation or dispute management. Either stand-alone or integrated solutions are available
in the market.
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