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.
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This extended membership will allow the bank to benefit from cross margining and hence to reduce our clearing cost in the future.
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.
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.
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.
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.
I am also pleased that the survey recognizes our superior synthetic financing capabilities and our leading cross margining capabilities across multiple asset classes.
By working with the Clearing Corporation to expand our existing services we are providing market participants with additional credit enhancements and cross margining opportunities for an expanding list of energy-related products.
The core package of services provided by DrKW's Prime Brokerage unit includes: margin lending/portfolio financing; securities lending; custody services; account risk/margin management; execution and consolidated reporting; and cross margining between cash equity or stock lending positions and synthetic equity products such as Contracts for Differences and Equity Swaps.