Risk glossary

 

Variation margin

The collateral exchanged to cover the gains or losses associated with the change in the price of a centrally cleared or bilaterally margined contract. Variation margin may be prescribed for exchange-traded deals, as well as bilateral deals and those that are cleared. On a periodic basis – often daily – collateral is exchanged to reflect the change in mark-to-market of a deal or portfolio of deals.

* see collateral; initial margin

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