During the Term of the Loan

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Status: Under Review, Last Updated: 09/03/2021

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Throughout the life of a LOAN vs. Non-Cash collateral, it is accepted that a borrower must collateralize a pending/settled position with appropriate, eligible assets that meet the parameters of the associated collateral schedule AND collateralize the loan to the required margin level.

In situations where a loan or loan book is under-collateralized, based on last available COB pricing, the collateral taker should initiate a request or a call for additional collateral to be agreed, instructed, and settled that day.

Start-of-day collateral requests or calls should be initiated as early as possible in the business day. Additional intraday and EOD movements should be supported on- demand - but no later than the settlement cycle of the related market.

If a Borrower needs to recall a Non-Cash collateral position, then a substitution must be arranged and settled before the recalled security can be released.

All Non-Cash collateral activity should be proactively monitored by both parties and should settle on the same day it is agreed and instructed.
If a collateral movement is failing, then there may be a need to cancel/renegotiate/replace/reinstruct the collateral.
Failure to settle collateral 'on-time' may lead to business escalation AND a delay in new loan activity being committed to market.

End of Day exposure may result in regulatory communication. (IBP-194)