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Banks Act, 1990 (Act No. 94 of 1990)

Regulations

Regulations relating to Banks' Financial Instrument Trading

Chapter 5 : Counterparty Risk

19. Explanatory terms for purposes of calculation of counterparty risk

 

(1) "Potential loss positions" means that potential profits may not be offset against potential losses.

 

(2) "Difference" means the differential between purchase price and current market price.

 

(3) "Market value" means the market value of the security or contract.

 

(4) "Notional value" means the notional or actual value of the security underlying the contract.

 

(5) "Free delivery" means—
(a) the delivery of securities or physical commodities that takes place before the seller or agency broker receives payment; or
(b) payment made in settlement of a credit balance arising from a sale on behalf of a counterparty or a purchase from a counterparty in respect of which the securities are undelivered.

 

 


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