Cross Margining

Cross Margining

The practice of a brokerage using the excess margin on one client's margin account to cover another margin account that has fallen below the margin requirement. An account that has fallen below the margin requirement is subject to a margin call, but some financial institutions practice cross margining to reduce the risk that a client will be unable to pay a margin call, which would create problems for all parties involved. Cross margining is also called a spread margin.
References in periodicals archive ?
7, 2015 /PRNewswire/ -- OpenGamma, a financial technology company specializing in market structure risk management solutions, has enhanced its multi-CCP margining solution to support Eurex ETD, OTC, and Cross Margining.
We are delighted that capital efficiency, cross margining and collateral management mechanisms proposed by EurexClearing are now available to both Natixis and its clients, said Nicolas Chauvet, Head of Derivatives, Treasury and Forex Operations at Natixis.
Newedge provides a range of value added services, including prime brokerage, asset financing, an electronic platform for trading and order routing, cross margining, and the centralized reporting of client portfolios.
This slate of contracts can be traded in tandem with the company's full suite of recently launched European natural gas futures, enabling participants to take a broad approach to energy risk management from a single marketplace and leveraging substantial savings across the two asset classes when cross margining across the slate is available in Q3 2015 (subject to regulatory approval).
Nick Chaudhry, Head of OTC Clearing at Commerzbank C&M commented: Cross margining solutions allow clients the potential to secure capital efficiences, and it is likely to be a powerful driver of clearing flows and liquidity going forward as the OTC clearing market matures.
futures market by evaluating and cross margining a clearing member's risk on a portfolio basis across related cash fixed income and derivative positions.
John Wilson, Global Head of OTC Clearing at Newedge, added: We are delighted to extend our OTC coverage to EurexOTC Clear, thereby enabling clients to enjoy even greater choice of clearing venues and open access to cross margining in the future.
Our customers will now have a complementary standardized product that provides the advantages offered by futures contracts including pricing transparency, the automatic netting of positions, and margin savings achieved through cross margining versus all other futures and options cleared through CME Clearing.
Participants have recognised immediately the benefits of cross margining with the liquid ICE NBP futures, along with our competitive pricing.
A leading player in brokerage, Newedge will combine the specific know-how (risk management, cross margining, financing, etc) of the two entities and provide an innovative and comprehensive prime brokerage offering, an alternative to the services proposed by investment banks to their institutional customers.
I am also pleased that the survey recognizes our superior synthetic financing capabilities and our leading cross margining capabilities across multiple asset classes.
The service builds on the strength of CME Group's market leading interest rate products business as well as the risk management and legal safeguards of CME Clearing, with an anticipated goal of offering capital efficiencies through cross margining OTC products with benchmark futures.