Dynamic credit management

A system for providing a financial evaluation of at least one financial instrument, the system comprising:

• a communications module for receiving debt market data associated with a transaction of the financial instrument between a party and a counterparty and counterparty credit quality data associated with the transaction of the financial instrument between the party and the counterparty;
• a processor coupled to the communications module;
• and
• a dynamic credit limit module for determining a dynamic credit limit for the counterparty based on at least one of the counterparty credit quality data and the debt market data, the dynamic credit limit defined in terms of a credit exposure versus time, wherein said dynamic credit limit module is communicatively coupled to said communications module and wherein the dynamic credit limit is defined by the following equation:
• D=M/(V*(Max(CMIN,CAVG)+N*σ)),
• where D is the dynamic credit limit of the counterparty, M is a maximum risk exposure of the party, V is a multiplicative factor, CMIN is the minimum credit cost of the party, CAVG is a credit cost average over a defined time interval, N is a multiplier, and σ is a historical standard deviation of C over said defined interval, and wherein the processor is coupled to the dynamic credit limit module.