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Regulatory Margin Requirements

Definition

Regulatory margin requirements are mandated levels of collateral that financial institutions and market participants must maintain when engaging in derivatives trading or other leveraged positions, as stipulated by governmental or industry oversight bodies. These requirements aim to mitigate systemic risk and protect market stability by ensuring that participants can cover potential losses. In the digital asset sector, these regulations are evolving to address the unique characteristics of cryptocurrency markets. Adherence is crucial for compliance.