Financial Risk Manager Part 2
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Four derivative counterparties (P, Q, R, and S) have established bilateral netting agreements to manage their exposure. The table below provides a detailed summary of their bilateral mark-to-market (MtM) positions, expressed in USD millions, reflecting the current market values of their respective trades.
Mark-to-Market Trades for Four Counterparties (USD million)
| Opposing Counterparty | ||||
|---|---|---|---|---|
| Q | R | S | ||
| Counterparty P | Trades with positive MtM | 8 | 10 | 4 |
| Trades with negative MtM | -6 | -2 | -4 | |
| Counterparty Q | Trades with positive MtM | 15 | 6 | 7 |
| Trades with negative MtM | -16 | 0 | -8 | |
| Counterparty R | Trades with positive MtM | 6 | 4 | 8 |
| Trades with negative MtM | -6 | -5 | -12 | |
| Counterparty S | Trades with positive MtM | 2 | 13 | 1 |
| Trades with negative MtM | -2 | -10 | -1 |
Assuming comprehensive netting agreements are in place across all pairs of counterparties, determine the correct ranking of net exposure per counterparty, listed from highest to lowest, in the context of the Financial Risk Manager (FRM) examination.