What if a clearinghouse hikes margins and amplifies a crisis?
A CCP hiking initial margin mid-crisis drains liquidity exactly when members are weakest — procyclical margin amplifies the original shock, with VIX/risk-parity unwind leading and high-beta plus credit dragged lower. Rhymes with the March 2020 and 2022 commodity/energy margin hikes that forced further liquidation. The channel is margin procyclicality: higher IM forces selling, which raises vol, which raises IM again. Forward angle: regulators are pushing anti-procyclicality buffers, but in a fast crisis they bind too slowly — long-vol remains the cleaner hedge than the equity short.
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The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (electric blue) over time vs the market's (Polymarket, amber), from the past toward the Tail risk horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. A clearinghouse hikes initial margin mid-crisis, draining liquidity exactly when members are weakest and amplifying the original shock. The trigger decomposes into signed root‑shocks — Volatility (VIX) ▲ · Financial conditions ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.