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Economic capital / Other risks [26]

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Bullet points include: If exchange traded then usually called margining Initial margin paid at outset (returned when position closed) Variation margin paid as mark-to-market of position changes (or if market conditions change formula can change) If OTC then usually called collateralisation Usually governed by Credit Support Annexe to ISDA master agreement Minimum initial payments and minimum transfer amounts, collateral flows can be two-way or one-way (e.g. some sovereigns) and may be credit rating dependent Scope for disagreements over price, usually one party is the calculation agency

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