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 overnight in short-term Treasury bills to earn interest for the clearinghouse
- It is immediately transferred to the trader with the winning (offsetting) position.
- It is destroyed by the exchange daily to preserve the zero-sum balance
- It sits untouched in a segregated escrow account until the futures contract eventually expires
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