The provision of collateral management services by a third party. This includes services such as marking to market, repricing and delivery, substitution of collateral, collateral allocation, etc. A third party (a custodian bank) acts as an intermediary. The custodian bank is the safe-keeper of the collateral on behalf of the lender It also assists in transferring funds from the lender to the borrower. A neutral tri-party agent undertakes transaction processing on behalf of both the borrower (collateral provider) and the lender (collateral taker).
Tri-party is also known as an escrow.
