Derivatives market collateral refers to assets pledged by participants in derivatives transactions to cover potential future obligations. This security measure reduces counterparty risk and ensures financial stability within the market. It is a standard practice in both traditional and decentralized finance to secure open positions.
Context
The use of digital assets as derivatives market collateral is a growing area within decentralized finance (DeFi), offering new liquidity avenues but also presenting unique volatility and liquidation risk management challenges. Regulators are examining appropriate risk parameters and capital requirements for such digital collateral to maintain market integrity.
We use cookies to personalize content and marketing, and to analyze our traffic. This helps us maintain the quality of our free resources. manage your preferences below.
Detailed Cookie Preferences
This helps support our free resources through personalized marketing efforts and promotions.
Analytics cookies help us understand how visitors interact with our website, improving user experience and website performance.
Personalization cookies enable us to customize the content and features of our site based on your interactions, offering a more tailored experience.
