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How Does a Clearing House Use “Margin Requirements” to Manage Risk?

Clearing houses use margin requirements as a primary tool to manage credit risk and ensure the integrity of the market. Margin is collateral posted by both buyers and sellers to cover potential losses from adverse price movements.

By setting and adjusting margin levels, the clearing house ensures that it has sufficient funds to cover a member's loss should they default, thereby protecting all other market participants.

How Is Collateral Used to Manage Counterparty Risk in Bilateral OTC Derivative Trades?
How Do Margin Requirements Mitigate Counterparty Risk in Derivatives Trading?
How Does Novation by the Clearing House Reduce Counterparty Risk?
How Does Collateralization (Margin) Work to Mitigate Counterparty Risk within a CCP Framework?