Cross Margining

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DEFINITION of 'Cross Margining'

An offsetting position where market participants are able to transfer excess margin from one account to another account whose margin is under the required maintenance margin.

Also known as "spread margin".

BREAKING DOWN 'Cross Margining'

Cross margining allows a market participant to reduce the total margin payment required. This method is mainly used by financial intermediaries to reduce their systematic risk.

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RELATED FAQS
  1. What does a futures contract cost?

    The value of a futures contract is derived from the cash value of the underlying asset. While a futures contract may have ... Read Full Answer >>
  2. How does a broker decide which customers are eligible to open a margin account?

    Brokers have the sole discretion to determine which customers may open margin accounts with them, although there are regulations ... Read Full Answer >>
  3. Are there leveraged ETFs that follow the retail sector?

    There are many exchange-traded funds (ETFs) that track the retail sector or elements of the retail sector, and some of those ... Read Full Answer >>
  4. What is the interest rate offered on a typical margin account?

    Interest rates on margin accounts vary according to the size of the loan and the brokerage firm being used. Generally, interest ... Read Full Answer >>
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