A Credit Support Annex, or CSA, is a legal document which regulates credit support (collateral) for derivative transactions. It is one of the four parts that make up an ISDA contract but is not mandatory. It is possible to have an ISDA agreement without a CSA but normally not a CSA without an ISDA.
A CSA defines the terms or rules under which collateral is posted or transferred between swap counterparties to mitigate the credit risk arising from "in the money" derivative positions.
Terms include thresholds, minimum transfer amounts, eligible securities and currencies, haircuts applicable to eligible securities and rules for the settlement of disputes arising over valuation of derivative positions.
To distinguish between the Schedule to the Master Agreement and the Credit Support Annex, the schedules are numbered as Sections and CSA are numbered as Paragraphs. To customise the requirements of an OTC Transaction, the clauses which are required are added as Paragraph 11 (for London Agreements) and as Paragraph 13 (for New York Agreements).
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