Settled to market: Difference between revisions
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imported>Doug Williamson (Create page. Source: ISDA file:///C:/Users/Panasonic%202/Downloads/ISDA%20VM%20Settlement%20Whitepaper%20final%20.pdf) |
imported>Doug Williamson (Classify page.) |
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''Derivative instruments'' | ''Derivative instruments''. | ||
(STM). | (STM). | ||
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* [[Market value]] | * [[Market value]] | ||
* [[Out of the money]] | * [[Out of the money]] | ||
[[Category:Financial_products_and_markets]] | |||
Latest revision as of 09:10, 2 July 2022
Derivative instruments.
(STM).
A settled to market (STM) derivative instrument is one under which the 'losing' counterparty is required to make periodic payments, usually daily, of the amounts by which the instrument is 'out of the money' for them.
This arrangement mitigates counterparty credit risk for the 'winning' counterparty under the derivative contract.
