Security, cash or something of value, deposited by the party owing money to the party to whom money is owed, to help assure that payables will be paid when due. The collateral is called for when the pre-established credit limit has been reached. In commodity markets, such payables arise from every physical or financial transaction where cash is paid upfront. Margin at a futures exchange is one form of collateral.
- Browse Related Terms: Collateral, Credit, Credit risk, Financial markets, Financial transaction, Financially settled, IntercontinentalExchange (ICE), Margin requirement, Open outcry, Price discovery, Risk Management
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