IMF’s Kiff: variation margin haircutting ‘unfair’ to end-users

Risk Derivatives Clearing: in-the-money end-users may have losses on other positions

IMF headquarters in Washington DC
IMF staffers split on variation margin gains haircutting

A financial stability expert has questioned the fairness of haircutting the variation margin of in-the-money end-users to stabilise a central counterparty (CCP) in a crisis.

"Usually, end-users have directional positions because their business just works that way. They're going to be equally in- or out-of-the-money after a big market move. There's an unfairness aspect to it because end-users didn't sign onto a CCP, the dealer did," said John Kiff, a senior financial sector expert at the

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