How Does a Prime Broker Manage Cross-Venue Margin for a Client?
A prime broker consolidates all of a client's positions across multiple exchanges and trading venues into a single, master account for margin calculation. This allows for portfolio margining, where offsetting positions across different venues can reduce the overall margin requirement.
This efficiency frees up capital and simplifies the client's collateral management. The prime broker handles the collateral transfers between venues.
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.
Collateral Transfers
Mechanism ⎊ Collateral Transfers represent the procedural movement of eligible assets between counterparties or to a clearing entity to satisfy margin requirements associated with derivatives positions.
Real-Time Position Data
Information ⎊ Real-Time Position Data refers to the continuous, low-latency stream of information detailing a trader's or a firm's current open exposures across all cryptocurrency and derivatives contracts.
Portfolio Margining
Leverage ⎊ Portfolio margining within cryptocurrency derivatives represents a risk-based approach to collateralization, differing from static mark-to-market methodologies.
Offsetting Positions
Position ⎊ In cryptocurrency derivatives and options trading, offsetting positions represent a deliberate strategy to neutralize or reduce existing exposure to a particular asset or market risk.