easy · FRM Part 1 Financial Markets and Products
What happens to the variation margin deposited by a trader with a losing position?
- It is invested in Treasury bonds to earn interest for the clearinghouse.
- It is immediately transferred to the trader with the winning (offsetting) position.
- It is destroyed by the exchange to maintain the 'zero-sum' balance.
- It is held in an escrow account until the contract expires.
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