Collateralized to market

Derivative instruments.

(CTM).

A collateralized to market (CTM) derivative instrument is one under which the 'losing' counterparty is required to make periodic margin payments, usually daily, of the amounts by which the instrument is 'out of the money' for them.

This mitigates counterparty credit risk for the 'winning' counterparty under the derivative contract.

See also

• Central counterparty
• Collateral
• Counterparty
• Credit risk
• Derivative instrument
• Initial margin
• Mark to market
• Market value
• Out of the money
• Settled to market
• Variation margin