There is a loophole (i.e., some FTR portfolios have zero or very small collateral requirements) in the current credit requirements for some FTR portfolios. There are other tools, not currently employed by PJM, that could improve the credit coverage of the FTR market. The so called ‘undiversified counterflow adder’ applies to all net counterflow portfolios, not simply undiversified FTR portfolios and therefore over collateralizes some FTR portfolios Additional tools and/or procedures could improve the credit coverage, provide additional coverage against ‘material’ portfolio defaults and reduce or eliminate the need for re-clearing of auctions