Practical Law Glossary Item 3-517-1759 (Approx. 3 pages)
Initial Margin (IM)
Collateral posted by a party to a derivatives transaction to provide an additional buffer against future exposure under the transaction that exceeds current mark-to-market exposure covered by posted variation margin (VM) collateral. Initial margin (or IM) collateral is designed to protect against volatility between the time a party's exposure is calculated and the time collateral is actually liquidated or transferred to it.