Collateral

RECENT NEWS
Mondo Visione  Oct 17  Comment 
Lombard Risk Management plc (Lombard Risk), a leading provider of integrated collateral management, regulatory compliance and reporting solutions for the financial services industry, is pleased to announce its latest release of COLLINE -- the...
Mondo Visione  Oct 7  Comment 
The EUR will become eligible as collateral on Moscow Exchange's Derivatives market from 13 October. The list of assets eligible as collateral currently includes the RUB and USD, as well as stocks and bonds. The addition of the EUR...
Mondo Visione  Sep 30  Comment 
Calypso Technology Inc., a leading provider of software solutions for the financial markets, announced today that Pacific Life Insurance Company has selected the Calypso Collateral Management solution for automation and optimization of their...
The Hindu Business Line  Sep 29  Comment 
BSE, along with its clearing corporation ICCL, has initiated the process of segregating and taking over the collateral towards base minimum capital (BMC) of trading members (brokers) from I...
Mondo Visione  Sep 29  Comment 
Third CCP to select globeSettle Clearing members will be able to choose to place collateral with globeSettle Helps meet CCPs new obligations under EMIR Offers Broker dealers a straight through collateral and custody solution London...
Mondo Visione  Sep 24  Comment 
From 29 September onwards triparty collateral services can be used for cross-border pledges to national central banks in the Eurosystem This European Central Bank (ECB) initiative will address collateral fragmentation and improve risk...
Mondo Visione  Sep 17  Comment 
Introduction Ladies and gentlemen, It is a pleasure to open the second day of the Second Joint Central Bank Seminar on Collateral and Liquidity, hosted by the European Central Bank (ECB) and the Deutsche Bundesbank. I will reflect on the...
Mondo Visione  Sep 16  Comment 
Calypso Technology, Inc., a leading provider of cross-asset front-to-back technology solutions for financial markets, announced today LCH.Clearnet Ltd and LLC have completed the project to introduce the Calypso Collateral Management solution to...




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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]

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