Variation Margin
A variable margin payment that is made by clearing members to their respective clearing houses based upon adverse price movements of the futures contracts that these members hold. Investopedia Says:
Variation margin is paid by clearing members on a daily or intraday basis in order to reduce the exposure created by carrying highly risky positions. By demanding variation margin from its members, clearing organizations are able to maintain a suitable level of risk and cushions against significant devaluations. Related Terms:
Clearing
Clearing House
Intraday
Leverage
Maintenance Margin
Margin
Margin Call |