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Collateral management

Handling the assets pledged to secure exposures, so both sides are protected if one party defaults.

Collateral management covers taking, valuing, holding and returning the assets pledged against loans, derivatives and repos. It includes applying haircuts, making margin calls and tracking what is held where.

Done well it reduces credit and counterparty risk and frees up high quality assets. It became far more prominent after the 2008 crisis and the rise of central clearing.

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