Variation margin

Variation margin

An additional required deposit to bring an investor's equity account up to the margin level when the balance falls below the maintenance margin requirement.

Variation Margin

Extra money that a member of a clearing house must pay to the clearing house to meet its minimum maintenance requirements. Members pay the variation margin each day or more often to protect the clearing house from the risks inherent to its members buying on margin.
References in periodicals archive ?
The Eris Methodology replicates the economics of OTC swaps in the form of capital-efficient futures products that consolidate the gross cash flows of analogous OTC swaps into a single futures price, resulting in cash flow occurring through variation margin.
Variation margin captures the marked-to-market change in the value of positions on a daily or, in exceptionally volatile periods, intraday basis.
In a press release, the Prudential Regulators say, "The proposed rule does not require a covered swap entity to collect specific or minimum amounts of initial margin or variation margin from nonfinancial end users, but rather leaves that decision to the covered swap entity, consistent with its overall credit risk management.
For example, Marshall and Steigerwald (2013) raise a concern about the time-critical liquidity that might be needed to pay a variation margin.
The DME end of day settlement price is used by the Clearing House to mark the market's open positions and thus establish the variation margin.
By expanding our liquidity access solutions, we can help support our clients' short-term liquidity needs so that they are not required to liquidate assets unnecessarily in order to meet the variation margin demands,' said Horsewill.
Scheduled for full operation in early 2014, this exclusive agreement with Euroclear will enable clients of DCCC and DGCX to use CCP-eligible securities held in Euroclear Bank -- and in all other entities connected to the Collateral Highway -- as collateral to fulfill initial and variation margin requirements at DCCC.
Scheduled for full operation in early 2014, this exclusive agreement with Euroclear will enable clients of DCCC and DGCX to use CCP-eligible securities held in Euroclear Bank - and in all other entities connected to the Collateral Highway - as collateral to fulfil initial and variation margin requirements at DCCC.
We conduct in-depth statistical analysis of the performance bonds (B), variation margins (V > 0 corresponds to a gain and V < 0 corresponds to a loss), and their ratio V/B, that is, the relative variation margin.
Initial and variation margin (or collateral) is collected from clearing members; should they fail, this margin is used to fulfil their obligations.
The counterparty to the contract must be required to make a payment in the nature of initial variation margin that is equal (before taking into account any change in the value of the contract between the time the contract is entered into and the time at which the payment is made) to the amount of the upfront payment made by the CFC; and
Okochi says posting collateral will typically be more cost-effective for end users than posting initial and variation margin to a clearing firm, and end users' dealer counter-parties will ask them to enter into credit support annexes (CSAs)--legal documents stipulating collateral support.