What Is the Function of the “Independent Amount” in a CSA?

The Independent Amount (IA) is an additional, fixed amount of collateral that a counterparty must post, regardless of the current mark-to-market exposure of the derivatives portfolio. It acts as an extra buffer to cover potential future exposure and is not dependent on daily portfolio value changes.

It is often used to cover risks not fully captured by the standard margin calculation, like operational or model risk.