Trade of the month: collateralisation
The increasing use of collateral in structured products has arisen from the need to alleviate counterparty risk. In its simplest form, structured products are debt instruments from issuers that promise to reward investors with a payout linked to an option on a separate underlying asset. Investors are attracted by the reward they would get for taking risk on the asset, though have been less inclined to also assume the credit risk of the issuer of the structured product, which is defined as the
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