How Does Collateral Management via Smart Contracts Improve Transparency for Counterparties?

Smart contracts improve transparency by making the collateral requirements, current collateral levels, and the rules for margin calls publicly verifiable on the shared ledger. Both counterparties can monitor the status of the collateral in real-time without relying on a trusted third party's reporting.

The rules for liquidation or margin adjustments are embedded in the immutable code, providing a clear, transparent, and auditable process for all participants.