Counterparty risk and Margin: Difference between pages

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(Slight wording change. Source: Qualifications syllabus)
 
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The risk to each party to a contract that the counterparty will not meet its contractual obligations.
1. ''Accounting.''
 
Profit margins measure the surplus of revenues over relevant costs, often expressed as a percentage.
 
Profit margins are usually expressed as a percentage of revenues, for example in the Net profit margin.
 
 
Less commonly, margins can also be expressed as a margin (percentage) on relevant costs.
 
Gross profit measured as a percentage of costs is also sometimes known as ''markup'', an amount added to costs to determine a selling price.
 
 
2. ''Banking.''
 
Net interest margin (NIM).
 
 
3. ''Bank lending.''
 
Lending margin is a percentage amount added explicitly to a market reference rate, to calculate the total rate of interest payable by a borrower.
 
 
4. ''Derivatives markets.''
 
Margin is a refundable deposit payable by market participants to protect other participants in the market against the risk of a default.
 
In this context, margin is a form of collateral.
 
 
5. ''Financing.''
 
An amount implicitly built into a total interest rate or discount rate - charged to a client - to cover risk and a level of profit for the finance provider.
 
 
6. ''Secured lending.''
 
An amount deducted from the value of an asset used as collateral, to calculate the maximum amount of any loan to be secured against the asset.
 
Also known as a 'haircut'.
 
 
7.  ''Project planning and management.''
 
A ''safety margin'' is an allowance for worsening of a key input or variable in a project.
 
 
8.
 
Any other difference, usually a relatively small difference compared with the amounts themselves being compared.
 
For example, forward margin in foreign exchange markets.




== See also ==
== See also ==
* [[Risk]]
* [[Alternate Base Rate]]
* [[Guide to risk management]]
* [[Bank margin]]
* [[Cash in the new post-crisis world]]
* [[BCBS]]
*[[Putting a limit on losses]]
* [[Collateral]]
 
* [[Contribution margin]]
* [[EMIR]]
* [[Exchange traded]]
* [[Forward margin]]
* [[Futures]]
* [[Haircut]]
* [[Initial margin]]
* [[International Swaps and Derivatives Association]]  (ISDA)
* [[International Organization of Securities Commissions]]  (IOSCO)
* [[Maintenance margin]]
* [[Margin call]]
* [[Margin compression]]
* [[Margin of safety]]
* [[Margin on costs]]
* [[Margin risk]]
* [[Marginal]]
* [[Margining]]
* [[Markup]]
* [[Net profit margin]]
* [[NII]]
* [[NIM]]
* [[Over the counter]]
* [[Profit margin]]
* [[Stepped margin]]
* [[Sustainability Linked Loan Principles]]
* [[Tax sparing]]
* [[Uncleared Margin Rule]]  (UMR)
* [[Variation margin]]
* [[WGMR]]


==Other links==
*[http://www.treasurers.org/node/8928 Treasury essentials: Counterparty risk, The Treasurer, April 2013]


*[http://www.treasurers.org/node/7758 Counterparty credit risk, Will Spinney, ACT 2012]
== External link ==
[https://www.bis.org/bcbs/publ/d499.pdf Margin requirements for non-centrally cleared derivatives - BCBS and IOSCO]


[[Category:Manage_risks]]
[[Category:Accounting,_tax_and_regulation]]
[[Category:The_business_context]]
[[Category:Financial_products_and_markets]]

Revision as of 13:24, 23 June 2022

1. Accounting.

Profit margins measure the surplus of revenues over relevant costs, often expressed as a percentage.

Profit margins are usually expressed as a percentage of revenues, for example in the Net profit margin.


Less commonly, margins can also be expressed as a margin (percentage) on relevant costs.

Gross profit measured as a percentage of costs is also sometimes known as markup, an amount added to costs to determine a selling price.


2. Banking.

Net interest margin (NIM).


3. Bank lending.

Lending margin is a percentage amount added explicitly to a market reference rate, to calculate the total rate of interest payable by a borrower.


4. Derivatives markets.

Margin is a refundable deposit payable by market participants to protect other participants in the market against the risk of a default.

In this context, margin is a form of collateral.


5. Financing.

An amount implicitly built into a total interest rate or discount rate - charged to a client - to cover risk and a level of profit for the finance provider.


6. Secured lending.

An amount deducted from the value of an asset used as collateral, to calculate the maximum amount of any loan to be secured against the asset.

Also known as a 'haircut'.


7. Project planning and management.

A safety margin is an allowance for worsening of a key input or variable in a project.


8.

Any other difference, usually a relatively small difference compared with the amounts themselves being compared.

For example, forward margin in foreign exchange markets.


See also


External link

Margin requirements for non-centrally cleared derivatives - BCBS and IOSCO