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How Does Netting Reduce the Required Collateral?

Reduces total net exposure, which in turn lowers the potential maximum loss, directly resulting in a lower initial margin requirement for the clearing member.
Greeks.Live23.11.25

How Does Netting Reduce the Required Collateral?

By reducing the total net exposure, netting lowers the potential maximum loss that the CCP needs to cover. Since margin is calculated based on this potential loss, a smaller net exposure translates directly into a lower initial margin requirement for the clearing member, making capital use more efficient.

How Does Netting Impact the Calculation of Capital Requirements under Basel III?
Define “Margin Requirement” in the Context of Derivatives and Its Relation to Netting
Define “Initial Margin” in the Context of a Derivatives Clearing House
What Is ‘Margin Netting’ and How Does It Reduce Initial Margin Requirements?

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