Standard CSA: Industry's solution to novation bottleneck gets nearer

Disputes over the valuation of trades backed by multi-currency credit support annex (CSA) agreements – in other words, those that allow counterparties to post collateral in multiple currencies and assets – have pushed the industry to develop a new standard CSA. Progress is being made, but a number of outstanding issues still need to be resolved. By Nick Sawyer

Michael Clarke, UBS

Given the volume of regulatory change being forced through the market, it might seem strange that the derivatives industry is mobilising so much of its collective effort on a seemingly dull initiative that isn’t even on the regulatory agenda – the drawing-up of a new standard template for the exchange of collateral in the over-the-counter market.

Dig a little deeper, however, and it starts making sense: the existing credit support annex (CSA) has become the source of regular collateral and