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Collateralized Swap
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A swap contract under which one or both counterparties post collateral, usually with a third party, to insure performance on the agreement. The collateral may be deposited on the trade date of the swap or it may be posted on demand only by the party who is the net creditor on the swap. Organized swap collateral depositories are being formed to take over the third party collateral management function. See Hybrid Instruments Transaction Service (HITS), Chicago Mercantile Exchange Swaps Depository Trust Company (CME DTC).
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