How Is Portfolio Margining Different from Simple Cross-Margining? ▴ Learn

How Is Portfolio Margining Different from Simple Cross-Margining?

Simple cross-margining typically involves offsetting margin requirements between specific, pre-defined pairs of related contracts. Portfolio margining is a more sophisticated, holistic approach that calculates the total risk of the entire portfolio, often using models like SPAN, to determine a single, risk-based margin requirement.

Portfolio margining provides a greater margin reduction for complex, hedged strategies.

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