Collateral & Depositories
Nodal Clear currently accepts cash and letters of credit in US Dollars (USD) as market collateral. Applied letter of credit balances at any one Clearing Member are capped at the larger of 50% of that Clearing Member’s customer initial margin requirement or $100MM, unless otherwise specified. Letters of credit are not subject to haircut.
Per Nodal Clear Rules, the Risk Management Committee may approve U.S. Treasury Securities (e.g., treasury bills, notes, and bonds) for use as collateral for initial margin requirements. At this time no securities have yet been approved for use, and no substitution of securities for cash is currently permitted.
Nodal Clear collects from Clearing Members a cash management fee on all cash deposits used to meet house and customer Initial Margin as well as Guaranty Fund deposits to defray the costs of managing and securing those funds. The cash management fee is collected on a monthly basis at an annualized rate of 15 basis points (0.15%) applied to cash deposit balances. The cash management fee is currently being waived for house and customer Initial Margin cash deposits.
All clearing members of Nodal Clear are required to maintain accounts at an Approved Financial Institution of Nodal Clear to ensure timely and secure payments of variation and initial margin. Currently, the following institutions are Approved Financial Institutions for Nodal Clear:
- The Bank of New York Mellon
- BMO Harris Bank, N.A.
- Brown Brothers Harriman & Co.
- CitiBank, N.A.