Margin policy

In order to close out a defaulting member’s contracts without residual loss for the clearing house, the clearing house must, at any time, have collected a sufficient margin. The purpose of a margining system is to calculate what this sufficient margin requirement is for each member. To enable a trustworthy clearing operation, the margin requirement should be reasonably conservative to avoid the risk that the clearing house could incur a loss caused by a member default.

Since closing out or neutralizing an account in a default situation can take time, there is a lead-time from the moment default occurs and the time at which NOS is able to close the member’s positions. It is conservatively assumed that it takes from two to five days to close out positions in the event of a default. The lead-time is dependent on the liquidity of the product in question. All members, regardless of their credit-standing, must meet the margin requirements.