How Does ‘Margin’ Relate to the Risk Covered by the Insurance Fund?

Margin is the collateral a trader posts to open and maintain a leveraged position. The insurance fund's risk is directly related to the margin system's failure to cover losses.

If a position is liquidated too slowly or the market moves too fast, the loss exceeds the margin, creating a deficit. This deficit, the difference between the bankruptcy price and the actual execution price, is what the insurance fund covers.