Like your CSA dirty? It’ll cost more

As dealers see it, collateral agreements sit on a continuum of cleanliness. A spectrum of spotlessness. An increasing number of pension funds and insurers are now trotting down to the grubbier end of that path – accepting costs that have become a growing point of difference and debate.

Banks favour credit support annexes (CSAs) in which counterparties only post cash to each other – super-helpful to any derivatives dealer, because cash is fungible, allowing incoming collateral to be used for