B. Where there is margining of equity and/or derivatives trading, margin levels and procedures should be designed to reduce the exposure of market participants and/or the market, including the clearinghouse, to credit, market, and other risks. In the derivatives markets, margin can provide protection to the clearinghouse and market participants against the potential default by a market participant as a result of price movements in individual instruments and changes in market volatility.

C. Margin requirements may be used in combination with other mechanisms to minimize risk to market participants, clearinghouses, and exchanges. Such other risk controls may include: circuit breakers, position limits, price limits, trading halts, capital adequacy, risk management systems, operational standards, and scrip lending limitations.

D. The costs of margin must be considered in light of the benefit of reducing risk. For example, a "cost" of high margin levels could be to reduce the leverage effect associated with such financial instruments that may affect investor interest and liquidity of certain products. Solutions to limiting such potential costs may include cross-margining and the use of a wide range of types of collateral.