Heightened market volatility following the Trump administration’s tariff escalation earlier this month triggered a sharp rise in derivatives margin calls, placing acute liquidity strain on hedge funds and other leveraged investors, according to a report by Reuters.

The report cites new data from post-trade services provider OSTTRA as revealing that from 2 April to 10 April, the total value of margin calls linked to derivatives nearly tripled, surging 180% before easing after a 90-day tariff pause was announced. The spike drove a 25% increase in margin-related disputes between trading counterparties, highlighting the operational and liquidity risks amplified by abrupt macro shocks.

OSTTRA, which reconciles over 90% of bilateral derivatives globally, said the surge was largely driven by variation margin – the additional collateral required when the market value of positions shifts, often in response to volatility, to protect counterparties from default risk.

While margin call values have since stabilised back to pre-tariff levels, the initial shock forced hedge funds to scramble for liquidity. To illustrate the impact, OSTTRA noted that a hedge fund with a typical daily exposure of 100 margin calls averaging $5m each – or $500m in collateral flows – was suddenly hit with an additional $900m in margin demands during the peak volatility, pushing total daily obligations to $1.4bn.

These flows were observed across multiple asset classes, including equities, rates, FX, commodities, credit derivatives, and repo trades, underlining the broad reach of margin pressure during market stress.