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Collateral

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Clearstream And Iberclear To Develop Collateral Management Service For Spain - Clearstream And Iberclear Sign Agreement And Plan To Launch The New Service In 2013 - Iberclear Clients To Benefit From More Efficient Use Of Their Domestic Collateral - Spai
Mondo Visione  May 22  Comment 
Iberclear, the Spanish central securities depository and subsidiary of BME (Bolsas y Mercados Españoles), and the international central securities depository Clearstream have signed an agreement to develop a new tri-party collateral management...
Hubtown pledges 7.77% stake as collateral against loan
The Economic Times  May 9  Comment 
Hubtown, erstwhile Ackruti City, has pledged 56.5 lakh shares in favor of ECL Finance, Edelweiss Securities, Edelweiss Financial Advisors and Edelweiss Stock Brokers.
Morgan Stanley Raises a Collateral Estimate
Wall Street Journal  May 7  Comment 
Morgan Stanley may have to put up $7.2 billion in additional collateral or termination payments to counterparties, and may face $2.4 billion in collateral requirements at certain exchanges and clearing organizations in the event of a three-notch...
Morgan Stanley Could Face Collateral Call
New York Times  May 7  Comment 
Brokers in a spot as NSE clarifies collateral norms
The Economic Times  May 7  Comment 
Brokers have been told to keep their own shares instead of their clients' as margins with stock exchanges.
ISDA: Perfecting Security Interests In Cash Collateral - Comment To Ontario Minister Of Consumer Services
Mondo Visione  May 7  Comment 
The purpose of this letter is to communicate the support of the International Swaps and Derivatives Association (ISDA) for the proposal of the Ontario Bar Association Personal Property Security Law Subcommittee entitled Perfecting Security...
BofA: Downgrades could require billions in collateral
Reuters  May 4  Comment 
Bank of America Corp would have been required to post $5.1 billion in collateral under derivatives contracts as of March 31 if major ratings agencies had downgraded its debt by two notches, the bank said in a quarterly filing on Thursday.
ECB tightens banks’ use of assets as collateral
Financial Times  Mar 23  Comment 
European Central Bank takes first step to tighten standards on the assets that banks can use as collateral when tapping it for liquidity
Collateral fears from ECB’s shot in the arm
Financial Times  Mar 19  Comment 
Analysts question side effects of banks’ tying up assets to access the short-term loan facility and wonder if long term it will prove more expensive




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This article is part of WikiProject Definitions. Consider editing to improve it. View articles referencing this definition.
 

Collateral is an asset or assets offered by a borrower in order to procure a loan. Should the borrower default on his payment(s), the lender would take possession of the collateral, which may then be sold to recoup the lender's losses.

Technically, collateral could be any asset, though typically it takes the form of personal property, investment securities, or real estate, the values of which can be readily determined.

Other terms in common use in the market are"margin", "margin asset" and "margin agreement" and similar terms using "credit support" instead of "collateral" or "margin," collateral", "collateral asset" and"collateral agreement." [1]

When a lender offers a loan against collateral offered by the borrower, the lender is said to take a security interest in the collateral. [2]

Examples

  • A woman takes out a mortgage to pay for her home. As collateral, she offers the home itself. Should she default on the loan, the lender (typically a bank) would take possession of the home. The bank may then sell the property to recoup its losses.
  • A man needs a cash loan to pay for several large, immediate expenses. As collateral, he offers the lender his car. Should he default on the loan the lender would take possession of the car, which he or she may sell to recoup losses.
  • In Uruguay, no private bank would accept cattle as collateral for a loan. By contrast, in Kansas, cattle are considered the best collateral for a loan.

14c., "accompanying," also "descended from the same stock," "side by side, "together" "parallel, along the side of" 16c., "colleague, associate." Meaning "thing given as security" is from 1832, Amer.Eng., from plrase collateral security (1720). [3]

See Also

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