Can Margin Calls Occur in OTC Forward Contracts? ⎊ Path

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.

Does a Margin Call Automatically Close Your Position?

What Is a ‘Credit Support Annex’ (CSA) and Its Role within the ISDA Framework?

What Is a Credit Support Annex (CSA) and What Role Does It Play?

Differentiate between a “Title Transfer” CSA and a “Security Interest” CSA

Does MTM Apply to Options Contracts in the Same Way as Futures?

What Is a Credit Support Annex (CSA) and How Does It Mitigate Credit Risk?

What Mechanisms Are Used to Trade Forward Contracts If They Are Not on an Exchange?

What Is the Significance of the ISDA Master Agreement in OTC Derivatives Credit Intermediation?