Additional Margin is usually used as a coverall for Margin requested from Clearing Members when the CCP has a risk concern of some sort, but there isn’t currently an official margin component to cover it. For example, Additional Margin may be required if it is felt that a portfolio carries too much risk compared with the capital of the clearing member.

Additional Margin may be charged to cover specific risks such as:

  • Liquidity Margin
  • Default Margin – to cover any insufficiency in the size of the default fund
  • Credit Margin – extra margin where a member has fallen below the required credit rating
  • Model Risk – to cover potential issues with the formulas used within the algorithm, for example the option pricing model
  • Wrong Way Risk Margin