Collateral

RECENT NEWS
Mondo Visione  Nov 20  Comment 
Genpact Limited (NYSE: G), a global leader in designing, transforming, and running intelligent business operations, and Lombard Risk Management plc (LSE: LRM), a leading provider of integrated collateral management, liquidity, and regulatory...
The Hindu Business Line  Nov 10  Comment 
Joint venture to offer farmers in AP, Telangana warehouse receipt financing
Mondo Visione  Nov 5  Comment 
As of 17 November 2014, customers can consolidate their holdings in Singaporean collateral through Clearstream and cover their global exposures from a single collateral pool  Collateral from Singapore and directly held at Standard Chartered...
Mondo Visione  Nov 4  Comment 
At the Euroclear Asia Collateral Conference held today in Singapore, Euroclear Bank and Standard Chartered Bank commemorated the launch of their joint collateral optimisation initiative. First announced last year, Standard Chartered Bank’s...
Mondo Visione  Nov 3  Comment 
TeraExchange® today announced that it has exclusively partnered with BitGo®, the leading bitcoin security platform, to provide multi-signature blockchain based custodial services for USD/Bitcoin swaps executed on its swap execution facility. By...
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...




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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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