Intraday Settlement

Intraday settlement is the process of settling gains and losses on derivative positions multiple times throughout the trading day, rather than waiting for the end of the day. This practice is used by clearinghouses during periods of extreme volatility to reduce the credit risk exposure between members.

By collecting variation margin throughout the day, the clearinghouse ensures that any losses are covered immediately, preventing them from accumulating. This is a vital tool for managing systemic risk in fast-moving markets like cryptocurrency.

It keeps the financial system lean and responsive to sudden price shocks. While it places higher liquidity demands on traders, it significantly enhances the safety of the clearinghouse.