VM regime threatens explosion of small margin calls

Transfer threshold designed to avoid small payments is unworkable, critics claim

An MTA of zero would result in an explosion of tiny margin calls

Some buy-side derivatives users are dispensing with a part of the incoming margining regime that was designed to make their lives easier, citing confusion about how to apply it. The consequence is expected to be more frequent – and smaller – margin payments, and an increased operational headache for clients and dealers alike.

The offending rule applies a combined minimum transfer amount (MTA) of up to $500,000 to the payment of variation margin and initial margin between two counterparties once