The ETC (exchange traded commodity) is backed by swaps. The payment obligations of the swap counterparties to the Issuer are protected by collateral held which is marked to market daily. The collateral is held in segregated accounts at The Bank of New York Mellon.
What is a swap and collateral in this context? I know that you can do "interest swaps" by getting a more suitable interest for your loan if you find a "middle man" and another party that needs to lend a similar amount and then swapping your interest for the other counterpart's interest through the middle man. But in this case I find the language to be too complicated to understand what is happening.
