In OTC market Collateral Posting as cash is normal, so when it is said

Collateral Posted as USD CASH

Does that mean Actual amount of currency is posted electronically (or any security is posted) and does it carry any interest Rate Risk?


1 Answer 1


It means that cash is posted electronically. The party receiving the cash must pay interest on it, usually Fed Funds on an overnight basis in the US, specified in the CSA (credit support annex).

  • $\begingroup$ As a complement to @dm63's answer: there is no interest rate risk, in the sense that as dm63 wrote the rate paid on collateral is overnight, hence it is reset daily. $\endgroup$ Oct 10, 2017 at 9:27

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