Does MTM Apply to Over-the-Counter (OTC) Derivatives?

Traditionally, MTM was not a standard feature of OTC derivatives like forward contracts or swaps, which were bilateral agreements. However, post-financial crisis reforms have mandated that many standardized OTC derivatives must be cleared through a CCP and are therefore subject to MTM.

Non-cleared OTC derivatives still rely on bilateral collateral agreements, which are similar to MTM but less standardized.