CCPs failing to set effective margin limits – study

Clearers must strike balance between countercyclicality and sensitivity to risk

Data

Initial margin (IM) policies at CCPs around the globe are under heavy fire. A spate of major margin breaches since the coronavirus hit has hastened calls to hike IM requirements – existing base requirements and ongoing scrutiny from regulators notwithstanding. Sudden spikes in IM demands on Nikkei futures and various benchmark oil contracts are among the many stark examples of margin hikes compounding the stress of volatile conditions.

Higher IM demands would reduce procyclicality – the

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