Bilateral Credit Limit(redirected from Bilateral Credit Limits)
Bilateral Credit Limit
The credit limit two banks extend to each other for securities trades that occur during a single day. That is, one bank may only borrow from the other up to the bilateral credit limit. Most of the time, the credit is netted at the end of the trading day, which allows one bank to borrow more than the credit limit in absolute terms, provided the other bank borrows an equivalent amount to bring it under the credit limit. For example, if the bilateral credit limit is $1 million, bank A may borrow $1.5 million from bank B provided bank B borrows at least $500,000 from bank A on the same trading day. See also: Bilateral netting.