What Is the Concept of ‘Isolated’ versus ‘Cross’ Margin in Relation to Maintenance Margin?
Isolated and cross margin define the pool of funds available to meet the maintenance margin requirement. With isolated margin, the maintenance margin is met only by the collateral specifically assigned to that position.
With cross margin, the entire account balance is available to meet the maintenance margin for all open positions. Cross margin effectively lowers the individual position's liquidation risk but increases the overall portfolio risk.
