BILATERAL COLLATERAL
\ba͡ɪlˈatəɹə͡l kəlˈatəɹə͡l], \baɪlˈatəɹəl kəlˈatəɹəl], \b_aɪ_l_ˈa_t_ə_ɹ_əl k_ə_l_ˈa_t_ə_ɹ_əl]\
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A COLLATERAL agreement between two COUNTERPARTIES that requires either party to post security, depending on the value of the PORTFOLIO of contracts and the level of unsecured credit limits that have been established. This type of arrangement is often implemented when two counterparties have approximately equal CREDIT RATINGS. See also UNILATERAL COLLATERAL.
By Henry Campbell Black
