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CCR mitigation is effected through the inclusion of the CCDS Reference Derivative as a simple contra netting set in the determination of counterparty EPE, giving rise to a substitution of EPE from the counterparty to the CCDS provider.
EPE to Novarum Global Trading is minimized through the application of daily cash margining under an ISDA Credit Support Annex ("CSA") to maximize the efficacy of the CCDS. All residual EPE is secured by a floating 1st lien over the assets of Novarum Global Trading.
The capital adequacy of Novarum Global Trading GmbH will be evidenced by a counterparty risk rating from Standard and Poor's Ratings Services. Failure to maintain a minimum counterparty risk rating of at least A- will result in the automatic early termination of all outstanding CCDS transactions at their current market value. |
