Definition: Assets (usually cash or securities) pledged by a borrower to a lender in order to secure a loan or a derivative position. Collateral reconciliation verifies that the amount and value of collateral held by a counterparty match the firm’s internal calculations based on current market exposure.
Example: A firm engaged in an OTC swap agreement reconciles the $5 million in cash collateral posted with its counterparty. The reconciliation ensures the counterparty acknowledges the full amount and that the collateral satisfies the margin requirements of the trade.
Explore the IVP Reconciliation Solution
The IVP Reconciliation Solution manages collateral complexity by integrating trade valuations with margin call data. As an integrated partner, IVP helps firms monitor collateral discrepancies in real-time to prevent over-collateralization and liquidity drag. Our team assists in the dispute resolution process with counterparties, ensuring that margin calls are accurate and that the firm’s credit risk is effectively mitigated.
