An example is parties to a future contract must deposit a specified amount in a

An example is parties to a future contract must

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An example is parties to a future contract must deposit a specified amount in a margin amount to ensure mutual respect of contractual obligations. It is a given fact that the price of the asset underlying a futures contract changes over time and therefore the current price is used to calculate where the margin account has enough funds to cover the new settlement price. If it proves after marking to market that the margin account has fallen below maintenance level a margin call will then be initiated requiring the deposit of additional money to top up that account again. Every bank needs a sound A/L risk management system even though developing an A/L risk management system is complicated and time-consuming job. The bank can use it not only for measuring interest rate risk exposure it could be employed for planning and profitability management throughout the institution.
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Reference Page Denis G. UYEMURA, Donald R. Van Deventer: Financial Risk Management in Banking. MCGraw-Hill Jean Dermine, INSEAD, Fontainebleau, July 17, 2003ALM in Banking in Stavros A. Zenios, William Ziemba: Handbook of Asset/Liability Management, 2003 Fund transfer pricing and A/L modeling, Journal of Bank cost & management Accountant,2000, Payant, W Randall The Handbook of Asset/Liability Management. Frank J. Fabozzi and Atsuo Konishi / Irwin McGraw-Hill 1991, 1996
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