margining

margining
The margining system is the means by which the London Clearing House ( LCH) controls the risk associated with a LIFFE clearing member's position on a daily basis. To achieve this, clearing members deposit cash or collateral with the LCH in the form of initial and variation margin. Initial margin is the deposit required on all open positions (long or short) to cover short term price movements. Deposits are returned by LCH to members when the position is closed. Variation margin is the members' profits or losses, which are calculated daily from the marked-to-market-close value of their open position. These amounts are credited to, or debited from their accounts. LIFFE

Financial and business terms. 2012.

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