A year old, but on point... https://www.russellclarkim.com/marketviews/russell-clark/2019/11/clearing-houses-and-initial-margin https://www.russellclarkim.com/

A year old, but on point... https://www.russellclarkim.com/marketviews/russell-clark/2019/11/clearing-houses-and-initial-margin https://www.russellclarkim.com/marketviews/russell-clark/201... > There is no doubt that a default by a clearinghouse member is more likely when initial margins are low and may be caused by a sharp unexpected move in the underlying markets. In the event of a default by one member this could trigger a chain reaction. Firstly, initial margins will rise in an event of a default, which will restrict other trader’s ability to participate in the market possibly acerbating the move in the underlying markets. Secondly, if the defaulting member was a particularly large player in one asset (likely, as this would be the cause of the default), the members with opposite positions may not receive variation margin and hence will become unhedged at the very moment they need hedging. Thirdly, the clearinghouse may well have to recapitalise itself from the surviving members. Major clearinghouse members (including JP Morgan) appear to be seriously worried about a clearinghouse problem after the default by a member of Nasdaq Clearing AB ..." Be careful out there. :-)