Cross Margin

[Options12]

Quote from rmorse:

http://www.finra.org/Industry/Regulation/Guidance/p038849

Middle of the page under "Eligible / Non-Eligible Products"

Thank you.

What do you suppose they are referring to here:

"However, until segregation issues between the SEC and the CFTC are resolved, the ability to combine securities and futures products into a single portfolio margin account will be unavailable."

And has this issue been resolved? Because I was under the impression that one can trade futures and securities within a single pm account these days.

 

[Maverick74]

Quote from Options12:

Thank you.

What do you suppose they are referring to here:

"However, until segregation issues between the SEC and the CFTC are resolved, the ability to combine securities and futures products into a single portfolio margin account will be unavailable."

And has this issue been resolved? Because I was under the impression that one can trade futures and securities within a single pm account these days.

You can trade futures in a portfolio margin account. You just don't get the cross margin relief on the options on futures. Doubt that will ever happen.

 

[rmorse]

Quote from Maverick74:

You can trade futures in a portfolio margin account. You just don't get the cross margin relief on the options on futures. Doubt that will ever happen.

Sorry Mav, you can't trade futures in a customer portfolio margin account. Futures have to be traded in a segregated futures account. It's a requirement by the CFTC and the futures exchanges. If you trade both, and your prime broker give you correct document to sign, they can seamlessly move money back and forth to meet margin requirements, however, the CPM account must maintain a value of at least $100K at the close everyday, or you can lose CPM, even if you have cash in the futures account.

 

[Maverick74]

Quote from rmorse:

Sorry Mav, you can't trade futures in a customer portfolio margin account. Futures have to be traded in a segregated futures account. It's a requirement by the CFTC and the futures exchanges.

Really? I didn't know that. I thought since the portfolio management account was segregated, that you could trade them, you just have to post full exchange margin.

I think IB let's you trade them but it swaps the money out of the cash securities account over to the futures account when margin needs to be posted. I may be wrong on that as well.

 

[rmorse]

Quote from Maverick74:

Really? I didn't know that. I thought since the portfolio management account was segregated, that you could trade them, you just have to post full exchange margin.

I think IB let's you trade them but it swaps the money out of the cash securities account over to the futures account when margin needs to be posted. I may be wrong on that as well.

The CPM account is segregated from other customer accounts, not from the firm. Because it's a margin account, securities are held in street name. That's why SIPC is important. Each master account is not commingled with other traders from other master accounts. But, if you put together a trading group with one master and sub-accounts, those traders can put the other traders at risk.

IB and other firms, we do it at Penson, allow the funds to be moved back and forth as needed. But, each account must have enough in assets to cover CPM in the securities account, and exchange margin in the futures account.

 

[Options12]

rmorse, what about Single Stock Futures in a pm account?

Are SSF's margined based on class groups within a cpm account at your firm or are these products margined separately from their class?

 

[rmorse]

Quote from Options12:

rmorse, what about Single Stock Futures in a pm account?

Are SSF's margined based on class groups within a cpm account at your firm or are these products margined separately from their class?

I'm not sure. I know very little about them. Go to https://cpm.theocc.com/tims_online.htm. If it's on the list, enter a position and you'll see the haircut on that position. If it's not on the list, it's most likely not included in CPM.

 

[Options12]

Quote from rmorse:

I'm not sure. I know very little about them. Go to https://cpm.theocc.com/tims_online.htm. If it's on the list, enter a position and you'll see the haircut on that position. If it's not on the list, it's most likely not included in CPM.

Thanks. I checked the list. It's helpful information. You have to go through here first, http://www.theocc.com/risk-management/cpm/, to get there.

 

[Options12]

Eligible positions for a pm account are listed on the main page:

"Positions eligible for a portfolio margining account include margin equity securities (including foreign equity securities and options on foreign equity securities provided the foreign equity is deemed to have a “ready market” under SEC Rule 15c3-1), listed options on an equity security or index of equity securities, security futures products, unlisted derivatives on an equity security or index of equity securities, warrants on an equity security or index of equity securities, broad-based index futures, and options on broad-based index futures."

 

[Options12]

rmorse, does your firm allow foreign currency positions in a pm account? If so, how do you handle the margin for the forex portion?