Why Do Brokers Increase Margin Requirements during Periods of High Market Volatility?

Brokers increase margin requirements to protect themselves and the market from excessive losses. High volatility increases the probability of rapid price movements, which can lead to a trader's account equity falling below maintenance margin quickly.

By requiring more collateral, the broker creates a larger buffer against potential defaults.

How Do Exchanges Adjust Margin Requirements during Periods of Extreme Volatility?
What Role Does the Clearing House Play in Mitigating a broker’S Risk from a Client’s Margin Default?
How Does the Process of ‘Rehypothecation’ Affect a Prime Broker’s Client Assets?
How Do Market Circuit Breakers Relate to Sudden Margin Requirement Changes?
What Are the Specific Permissible Uses of Segregated Client Funds by a Broker-Dealer?
What Is a “Liquidation Cascade” and How Does High Margin Prevent It?
How Does the Concept of “Value at Risk” (VaR) Influence Margin Setting?
How Do Exchanges Adjust Maintenance Margin Requirements during Periods of High Market Volatility?

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