Can Margin Calls Occur in OTC Forward Contracts?

Margin calls are not a standard feature of traditional, uncleared OTC forward contracts. Since there is no central clearing house and no daily MTM, the contract's value is settled only at expiration.

However, the private parties can bilaterally agree to a Credit Support Annex (CSA). A CSA may stipulate collateral requirements and margin-like calls to manage bilateral credit risk throughout the contract's life.