Document ID: chunk:federal_register_of_legislation:F2024C00507:body:0:p23
Version: federal_register_of_legislation:F2024C00507
Segment Type: other
Provision Reference: 
Character Range: 62462–65617

daily calculation of collateral requirements.
close out                              The process of offsetting an existing contract by entering into a new contract of an equal and opposite position.
collateral                             An asset or third-party commitment that is used by a collateral provider to secure an obligation vis-à-vis a collateral taker.
commercial bank money                  A liability of a commercial bank, in the form of deposits held at the commercial bank, which can be used for settlement purposes.
conflict of laws                       An inconsistency or difference in the laws of jurisdictions that have a potential interest in a transaction.
counterparty                           A party to a trade.
credit risk                            The risk that a counterparty, whether a participant or other entity, will be unable to meet fully its financial obligations when due, or at any time in the future.
cross-margining arrangement            An agreement among central counterparties to consider positions and supporting collateral at their respective organisations as a common portfolio for participants that are members of two or more of the organisations.
current exposure                       The loss that a central counterparty (or in some cases, its participants) would face immediately if a participant were to default. Current exposure is technically defined as the larger of zero or the market value (or replacement cost) of a transaction or portfolio of transactions within a netting set with a counterparty that would be lost upon the default of the counterparty.
custody risk                           The risk of loss on assets held in custody in the event of a custodian's (or sub-custodian's) insolvency, negligence, fraud, poor administration or inadequate recordkeeping.
default                                An event stipulated in an agreement as constituting a breach or default. Generally, such events relate to a failure to complete a transfer of funds or securities in accordance with the terms and rules of the system in question.
delivery versus delivery (DvD)         A securities settlement mechanism that links two securities transfers in such a way as to ensure that delivery of one security occurs if and only if the corresponding delivery of the other security occurs.
delivery versus payment (DvP)          A securities settlement mechanism that links a securities transfer and a funds transfer in such a way as to ensure that delivery occurs if and only if the corresponding payment occurs.
Exchange Settlement Account            An account held at the Reserve Bank which is used for the final settlement of obligations between Exchange Settlement Account holders.
external administration                This term has the meaning given by section 5 of the Payment Systems and Netting Act 1998.
final settlement                       The irrevocable and unconditional transfer of an asset or financial instrument, or the discharge of an obligation by a central counterparty or its participants in accordance with the terms of the underlying contract. Final settlement is a legally