How Does Margin Call Management Relate to a Prime Broker's Risk Mitigation? ⎊ Path

How Does Margin Call Management Relate to a Prime Broker’s Risk Mitigation?

Margin call management is the process of continuously monitoring a client's derivatives positions and collateral to ensure sufficient funds are posted to cover potential losses. When a client's collateral falls below the maintenance margin due to adverse market moves, the prime broker issues a margin call, demanding immediate additional funds.

This prevents the broker from absorbing the client's losses in case of a default.

What Role Does Collateral Management Play in a Prime Broker’s Derivatives Services?

What Is the Difference between Initial Margin and Maintenance Margin?

What Is ‘Rehypothecation’ and Why Is It a Concern When Using Certain Custodians or Prime Brokers?

How Does a Prime Broker Manage Cross-Venue Margin for a Client?

Define “Rehypothecation” and Its Implications for Crypto Collateral

How Is Counterparty Credit Risk Managed When a Prime Broker Acts as a Central Counterparty?

What Is “Rehypothecation” and How Is It Controversial in the Crypto Prime Brokerage Space?

How Does the Process of “Porting” Client Accounts Work during a Member Default?

Glossar

Margin Call Management

Protocol ⎊ Within cryptocurrency derivatives and options trading, a formalized protocol for margin call management represents a critical layer of risk mitigation, particularly given the heightened volatility and operational complexities inherent in these markets.