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 ?
This extended membership will allow the bank to benefit from cross margining and hence to reduce our clearing cost in the future.
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.
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.
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.