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Banking

What is Variation Margin Call?

Variation Margin Call A demand by a clearinghouse or counterparty for additional collateral to cover current exposures resulting from changes in the market value of derivatives positions. Required under regulatory margining rules to mitigate credit risk.

Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework

How is “Variation Margin Call” Used in Practice?

A sharp drop in asset prices triggered a variation margin call requiring market participants to post additional collateral.

Certification Exam Relevance

CFAACCAFRM

Who Needs to Know This Term?

  • Financial Analysts
  • Bankers
  • Traders

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Frequently Asked Questions

What is Variation Margin Call?

A demand by a clearinghouse or counterparty for additional collateral to cover current exposures resulting from changes in the market value of derivatives positions. Required under regulatory margining rules to mitigate credit risk.

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