Haircuts on collateral are set in advance in a credit support annex (CSA) for each type of collateral, taking into account how much its price moves. Around 2017, after even highly rated bonds fell sharply in price during the financial crisis, cash collateral, whose value does not move, was becoming more common, mainly in Europe and the United States.
Consider a hypothetical example in which a government bond with a market value of 10 billion yen is posted with a 2% haircut. It counts as 9.8 billion yen of collateral. Japan's margin rules also value non-cash margin at its market value minus the market value multiplied by a percentage set by the Commissioner of the Financial Services Agency. When the asset's currency differs from the currency the parties agreed on, a further percentage is deducted.