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It is not clear for me the mechanism of margin requirements for OTC variance swaps.

I don't see in supplementary information to OTC Swaps the rules of margin maintenance or initial margin or something like that. How do the counterparties guarantee (without margin, unlike in futures trading) that trade losses do not exceed the initial deposit amount?

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  • $\begingroup$ Are they guaranteeing losses will not exceed IM? $\endgroup$ – will Sep 8 '19 at 9:25

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