Margin Netting between Commodity Futures and Options

Informative

More liquidity for investors trading commodity derivatives

Commodity derivatives market participants will soon have access to a new feature: automatic margin netting between Futures and Options positions for the same commodity.

Currently, margins are calculated separately for each type of transaction. With this improvement, B3’s system will integrate positions and calculate a consolidated margin based on the total portfolio risk.

Therefore, the new solution will reduce margin requirements with an impact on the main cost of commodity derivatives transactions – the daily margin call – freeing up capital that can be used for other investment opportunities or transactions. It will also bring operational improvements, a more accurate view of risk and increased liquidity.

Project Tags:

Listed

In Progress

Commodities

Clearinghouse

Product benefits

Cost reduction

Position integration will generate a lower consolidated margin.

Operational efficiency

Automatic margin netting streamlines the risk management process, making it more agile and efficient.

Greater liquidity

With less capital tied up in margins, participants gain flexibility to move to new strategies.

Risk optimization

Integrated position analysis allows for a more accurate reflection of the portfolio's actual risk.

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Consolidated margin will reduce costs and bring greater efficiency to the market.

Futures and options trades will be assessed together to identify positions that can offset each other. Once identified, the required margin will be recalculated based on the aggregate risk of the combined positions. This process will be automatic, ensuring that investors benefit from margin reduction without the need for manual intervention.

Commodity Futures and Options are instruments that allow investors to trade physical products such as beef cattle, corn, coffee, soybean, oil, gold, and others without having to actually buy or sell the commodity.

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