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 ?
On average, AcadiaSoft MarginSphere clients electronically exchange OTC bi-lateral margin calls and agree collateral movements on more than 190,000 active Variation Margin (VM) CSA agreements each day, as well as more than 2,000 active regulatory Initial Margin (IM) CSA agreements.
Agreement Manager, will match, store and exchange new and existing ISDA Variation Margin (VM) and Initial Margin (IM) details as well as the Account Control Agreements between trading parties and custodians.
He also briefed the audience on the key features of the Credit Support Deed for cash collateral developed to address the recent variation margin regulatory requirements.
With regard to the continuation of IIFM in its bid to develop the Islamic financial industry, IIFM has started 2017 with the publication of Islamic Credit Support Deed for Cash Collateral (Variation Margin) and is currently working with the industry to complete the standard Islamic Risk Participation Agreements for unfunded and funded transactions related to trade finance business.
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.
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." Again, that is how things stand today, Dodd-Frank notwithstanding.
Dealers have traditionally posted variation margin to each other, so that's not a game-changer in the new Fed rule.
And, because a central clearing party will adjust its counterparties' margin requirements (variation margin) as new information manifests in changes in prices readily available to all participants on swap trading platforms, timely adjustments will work to limit the buildup of systemic risk like that posed by AIG's inadequate margin holdings.
The DCCC guarantees settlement for all trades executed on the Dubai Gold & Commodities Exchange (DGCX), which is supported by a system of initial and variation margins. 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.
She said that these calculations could even under-estimate the actual amount of liquidity ultimately needed by life insurers because of the additional need to continue to post "variation margin" collateral and the higher collateral needs of longer-dated/more complex swaps.
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