How Do Institutional Traders Use Cross-Margining through a Prime Broker?
Cross-margining allows a trader to use the excess collateral from one position to meet the margin requirements of another, even across different asset classes or products. A prime broker calculates the net risk of the entire portfolio.
This significantly improves capital efficiency by reducing the total required margin. It is especially useful for strategies involving offsetting long and short positions.
Glossar
Prime Broker
Facilitation ⎊ A prime broker, within cryptocurrency derivatives and options trading, functions as an intermediary providing services to hedge funds and other large institutional investors.
Institutional Traders
Capital ⎊ Institutional traders, within cryptocurrency derivatives and options markets, represent a significant source of liquidity and price discovery, often deploying substantial capital across diverse strategies.