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.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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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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