Define “Initial Margin” in the Context of a Derivatives Clearing House.

Initial margin is the collateral required by the clearing house from its clearing members to cover the potential loss that could occur between the last margin calculation and the time it would take to liquidate the member's positions. It is a good-faith deposit, calculated using risk-based models, to ensure that the clearing house is protected from a member's default and can guarantee the integrity of the market.

How Does the Clearing House Manage a Default by a Member Firm?
What Happens to a Clearing Member’s Collateral If the Member Defaults?
What Role Do ‘Default Funds’ Play in the Clearing Process?
What Is the “Waterfall” Structure of Loss Absorption in a Clearing House?
How Does the Risk of a Clearing Member Default Differ from a Direct Counterparty Default?
What Is the “Waterfall” Structure of a CCP’s Financial Resources?
In What Scenario Would a CCP Seize a Clearing Member’s Initial Margin?
Can a Clearing House Default If Its Capital Is Depleted?

Glossar