Negative Eonia rate causes CSA headaches
Eonia's move into the negative implies parties posting collateral must also pay interest to their counterparties, which has led to calls for clarity from dealers – especially for one-way CSAs
Correction, 17 Sep 2014: The original version of this story stated incorrectly that Isda's negative interest protocol does not distinguish between one- and two-way CSAs. The article has been amended.
Derivatives market participants have been scrambling to clarify and modify the terms of their collateralised trades after Eonia - the rate commonly paid on euro-denominated collateral - fell into negative territory late last month.
Eonia dropped to -0.004% on August 28 and then to -0.007% on
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