How Does Regulatory Oversight Restrict the Use of Portfolio Margining in Some Jurisdictions?
Regulatory bodies often impose strict eligibility requirements on the use of portfolio margining, such as requiring specific account types, minimum account sizes, and approval only for sophisticated institutional traders. They may also restrict which products can be cross-margined and mandate specific, conservative risk models.
These restrictions are in place to ensure that only capable parties use the riskier, but more capital-efficient, method.
