Variation margin (VM) · Concepts · European Finance Observatory

Roles that need it

Initial margin (IM)Initial margin (IM) is collateral collected to cover the potential future loss on a portfolio if a counterparty defaults, over the time needed to close out or replace the positions. Central counterparties collect it from clearing members; for uncleared derivatives, covered firms exchange it two-way and keep it segregated.
Margin callA margin call is a demand by one party, or by a central counterparty, for additional collateral when exposure rises or collateral value falls below the agreed level. The other party must deliver eligible assets within the agreed time, usually the same or next business day; disputes are reconciled and escalated.
CSA (Credit support annex)A credit support annex (CSA) is the part of International Swaps and Derivatives Association (ISDA) documentation that governs collateral for derivatives between two parties: eligible assets, haircuts, thresholds, minimum transfer amounts, valuation and timing of calls. Regulatory CSAs set the terms needed to meet EU margin rules for uncleared derivatives.
CCP (Central counterparty)A central counterparty (CCP) is an entity that interposes itself between the parties to trades in one or more markets, becoming the buyer to every seller and the seller to every buyer. It manages counterparty risk through membership rules, margin, a default fund and a default waterfall, and in the EU is authorised under the European Market Infrastructure Regulation (EMIR).

Updated 31 Oct 2026.