A quick primer on “settled-to-market” vs. “collateralized-to-market” in counterparty credit risk (Premium)

CCPs have changed or are changing their rules on Variation Margin to allow “settled-to-market” (STM). This is a useful change that will save money, and complements the desire of firms to lower their outstanding capital requirements. This article provides a short primer on STM vs. the older standard, “collateralized-to-market” (CTM).
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