How Does Collateral Management Differ between Bilateral and Cleared Trades?

In bilateral trades, collateral management is negotiated and governed by the CSA, often allowing for a wider range of collateral types and customized thresholds. In cleared trades, the CCP dictates strict, standardized rules for eligible collateral, valuation, and margin calls, typically requiring highly liquid assets.

The CCP's process is more rigid but provides greater certainty and efficiency.