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

A CSA is a legally binding document attached to an ISDA Master Agreement that governs the terms of collateral exchange for OTC derivatives. It specifies which assets are acceptable as collateral, the thresholds for margin calls, and the frequency of margin exchange.

By mandating collateral posting, it significantly reduces the counterparty's credit exposure to manageable levels.