Collateral

A clearing house must not only establish robust initial margin requirements. It must also ensure that the collateral to cover the margin requirements is of the highest quality, is held securely, and is available, without realistic legal challenge, when required. In selecting what is acceptable as collateral, NOS evaluates counterparty, legal, liquidity, and performance risk.
NOS accepts collateral in the form of cash, El-certificates and guarantees issued by approved banks. The guarantees are of a standard form drafted by NOS.

In addition to cover the portfolio margin requirement, the clearing members have to post collateral to cover the Individual Base Collateral and Mutual Base Collateral contribution. The Mutual Base contribution has to be covered with cash collateral while the Individual Base can be covered with either cash or guarantees. For more information regarding the Mutual Base Collateral and Default Fund, please see Notice 13/2011.