What Is the ‘Margin Requirement’ Set by a Clearing House?

The margin requirement set by a clearing house is the amount of collateral that a clearing member must deposit and maintain with the clearing house. This collateral is intended to cover the potential losses that could arise from the member's or their client's derivative positions.

The margin is calculated daily based on the volatility and size of the positions. It acts as a performance bond, ensuring that the clearing house has a financial buffer to absorb losses in the event of a member's default.