Liquidity Margin is also known as Concentration Margin. In a default the CCP will be responsible for hedging and then closing (either by auction or trading) the clearing member positions. This is likely to cost more if the member has a large position. To allow for this, a liquidity component is included in the Initial Margin.
The Liquidity Margin is a non linear component of the margin, usually only calculated once a position goes above a particular size. It can have a significant impact on the margin requirement for certain positions. Find out more here: How liquidity add-ons can impact margin.
We invite you to explore a wide selection of blogs and Ebooks on our insights page, such as our Ebook on Liquidity Management In Oil Markets. Lastly, learn more about OpenGamma by watching our demo and taking a look at our product and solutions pages.
