How Does a Margin Call Differ from a Collateral Call in OTC Derivatives?
A margin call is a standardized demand for funds based on the MTM process of a centrally-cleared futures contract. A collateral call in OTC derivatives is a similar demand for additional collateral, but it is based on the terms of a bilateral agreement (Credit Support Annex or CSA) and is often less frequent (e.g. weekly) and less standardized than a futures margin call.
Glossar
Collateral Valuation
Framework ⎊ Within cryptocurrency derivatives and options trading, collateral valuation establishes a foundational risk management layer, particularly crucial given the volatile nature of digital assets and complex financial instruments.
MTM Process
Calculation ⎊ This systematic procedure involves valuing all open derivative positions using the latest available market data, including spot prices and the prevailing implied volatility surface.
OTC Derivatives
Structure ⎊ OTC derivatives, operating outside regulated exchanges, represent privately negotiated contracts referencing underlying cryptocurrency assets, interest rates, or other financial instruments.