How Do the Capital Benefits of Portfolio Margining Compare to Traditional ‘Gross’ Margining?

Portfolio margining provides significantly greater capital benefits than traditional gross margining. Gross margining requires collateral for every single position independently, leading to capital lock-up.

Portfolio margining, by netting risks, drastically reduces the total required collateral. For a well-hedged portfolio, the capital savings can be substantial, often resulting in a 50-70% reduction in margin requirements.