How Do Exchanges Adjust Maintenance Margin Requirements during Periods of High Market Volatility?

During high market volatility, exchanges typically increase the maintenance margin requirement. This is a risk management measure to create a larger equity buffer for all leveraged positions.

The higher requirement forces traders to either add more collateral or reduce their position size. This preemptive action helps the exchange manage systemic risk and reduces the likelihood of cascading liquidations that could overwhelm the insurance fund.