In some cases (depending on the client’s classification), OTC derivative trading regulations require the bilateral exchange of margining or collateral to cover market and credit risk.
Determining the client’s classification and potential need for margining requirements is covered by section 4 of the OTC client onboarding form.
Variation margin is aimed at protecting the Bank against market movements while initial margin seeks to protect the Bank against default by the counterparty.
Margining requirements will be dealt with directly by the Bank without your being involved.
The Bank seeks your acknowledgment to collect the above information and to inform us in due course should there be a change in circumstance, such as a change in threshold for margining. This applies to all types of mandates.