# How Does a Broker's House Margin Policy Interact with SPAN or TIMS? ▴ Question

**Published:** 2025-08-02
**Categories:** Question

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## Concept

The calculation of margin on a [derivatives](https://prime.greeks.live/area/derivatives/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) portfolio is an exercise in viewing risk through a series of lenses, each with a progressively finer resolution. An institutional trader’s relationship with their broker is defined by this process. The interaction begins with standardized, exchange-mandated risk models like the Standard Portfolio Analysis of Risk (SPAN) or the Theoretical Intermarket Margin System (TIMS). These models represent the foundational layer of the [risk management](https://prime.greeks.live/area/risk-management/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) architecture, the common protocol upon which the entire system is built.

They provide a robust, portfolio-level assessment of potential one-day losses based on a series of predefined market scenarios. This is the baseline, the universally accepted measure of risk dictated by the clearinghouse or exchange.

A broker’s [house margin policy](https://prime.greeks.live/area/house-margin-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) operates as a second, proprietary layer of this architecture. It is the broker’s specific risk management operating system, running on top of the foundational SPAN or TIMS protocol. This [house policy](https://prime.greeks.live/question/what-are-the-primary-data-requirements-for-building-an-effective-in-house-transaction-cost-analysis-system/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) is not a replacement for the exchange-level calculation; it is an augmentation. It addresses the specific, and often unique, risk exposures that a generic, one-size-fits-all model may not fully capture.

The broker’s primary responsibility is to ensure the solvency of its clients and the firm itself, a duty that compels a more granular and sometimes more conservative view of risk than that mandated by the exchange alone. This overlay is where the true dialogue between a trader’s strategy and a broker’s risk appetite takes place.

> A broker’s house margin policy is a proprietary risk management overlay applied on top of standard exchange-level margin models like SPAN or TIMS.

The necessity for this dual-layer system arises from the inherent limitations of any standardized model. [SPAN](https://prime.greeks.live/area/span/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) and [TIMS](https://prime.greeks.live/area/tims/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) are engineered for broad applicability across thousands of market participants. They are exceptionally effective at modeling price and volatility risk under a range of “normal” to “stressed” market conditions. Their calculations are based on historical data and statistical models that simulate shifts in underlying prices and implied volatilities.

The result is a single, efficient [margin requirement](https://prime.greeks.live/area/margin-requirement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) for a complex portfolio of [futures and options](https://prime.greeks.live/area/futures-and-options/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). This efficiency, however, creates gaps. A standardized model cannot adequately account for the idiosyncratic risks of a single, highly concentrated portfolio, the liquidity profile of a specific options contract, or the potential for catastrophic tail events that lie beyond the model’s built-in scenarios. It is these specific gaps that a house policy is designed to fill.

Therefore, the interaction is hierarchical. The SPAN or TIMS calculation establishes the mandatory minimum margin, the regulatory floor. The broker’s house policy then analyzes the portfolio through its own set of risk parameters. These parameters might include concentration limits on specific underlyings, additional charges for deep out-of-the-money short [options](https://prime.greeks.live/area/options/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), or stress tests that model market moves far more extreme than the exchange’s standard scenarios.

If the house policy’s calculation determines a higher risk value than the SPAN/TIMS baseline, the broker will require the higher amount of margin. This additional requirement is the manifestation of the house policy in action. It represents the broker’s specific judgment on the portfolio’s risk, a judgment informed by its own capital position, risk tolerance, and view of the market’s stability.

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## The Foundational Layer ▴ SPAN and TIMS

Understanding the base layer is essential to appreciating the function of the house overlay. Both SPAN, developed by the Chicago Mercantile Exchange (CME), and TIMS, from the Options Clearing Corporation (OCC), are portfolio-based, risk-based methodologies. This approach is a significant evolution from older, strategy-based margin systems that would assign fixed margin amounts to specific positions or spreads. A portfolio-based system looks at the net risk of all positions held by a trader.

It recognizes that a portfolio containing a long [futures](https://prime.greeks.live/area/futures/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) contract and a protective put option has less risk than a portfolio with only the long futures contract. The system nets these offsetting positions, resulting in a more accurate and capital-efficient margin requirement.

SPAN accomplishes this by simulating the portfolio’s performance across a set of 16 standardized scenarios. These scenarios, or “risk arrays,” model different combinations of price movements (the “price scan range”) and changes in implied volatility (“volatility shifts”). The system calculates the profit or loss for the entire portfolio in each of these scenarios. The largest calculated loss across all scenarios becomes the primary component of the [SPAN margin](https://prime.greeks.live/area/span-margin/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) requirement.

TIMS functions on a similar principle, using an option pricing model to revalue a portfolio under various hypothetical market conditions to determine the potential loss. Both systems provide a sophisticated, data-driven assessment of a portfolio’s one-day risk exposure.

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## The Broker’s Overlay ▴ The House Policy

A broker’s house [margin policy](https://prime.greeks.live/question/what-are-the-primary-differences-between-bilateral-margin-and-central-clearing-margin-protocols/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) is a discretionary and proprietary system of risk management that complements the standardized models. The broker consumes the same risk parameter files from the exchanges that are used for SPAN and TIMS calculations. The broker then applies its own logic, its own additional scenarios, and its own concentration rules.

This is not an arbitrary process. It is a calculated response to specific, well-understood risk categories that a universal model cannot fully address.

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## What Are the Primary Drivers of a House Margin Policy?

A broker’s decision to implement a house policy is driven by several key risk factors that fall outside the direct scope of standard margin models. These policies are the firm’s primary defense against unforeseen market dislocations and concentrated client-side risks.

- **[Concentration Risk](https://prime.greeks.live/area/concentration-risk/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)** ▴ This is perhaps the most significant driver. A standard [SPAN calculation](https://prime.greeks.live/area/span-calculation/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) might assess a reasonable margin for a portfolio of 100 contracts in a liquid product. However, if a single client holds a position of 50,000 contracts, the broker faces a new dimension of risk. A forced liquidation of such a large position could itself move the market, exacerbating losses. House policies often impose escalating margin requirements as a client’s position size grows relative to the product’s total open interest or average daily volume.

- **[Liquidity Risk](https://prime.greeks.live/area/liquidity-risk/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)** ▴ A margin model assumes that positions can be liquidated at or near the current market price. This assumption breaks down for illiquid options or futures contracts. A broker’s house policy may apply a liquidity premium or a higher margin requirement to positions in less-traded products, reflecting the higher cost and market impact of closing out such positions, especially under stress.

- **[Tail Risk](https://prime.greeks.live/area/tail-risk/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) and Gap Risk** ▴ SPAN and TIMS model “stressed” scenarios, but these are still within a statistically defined range. [House policies](https://prime.greeks.live/question/what-are-the-primary-data-requirements-for-building-an-effective-in-house-transaction-cost-analysis-system/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) often incorporate proprietary stress tests that model “black swan” events ▴ sudden, extreme market moves that can cause prices to “gap” down, bypassing all the intermediate price points where a stop-loss order might have been executed. The broker may add margin to cover potential losses from such gap events, particularly for accounts with large, unhedged short option positions.

- **Model Risk** ▴ Every financial model has limitations. A broker is acutely aware of the model risk inherent in SPAN or TIMS. The house policy serves as a hedge against the possibility that the standard model’s assumptions (e.g. about correlations between products or the behavior of volatility) prove incorrect in a crisis.

The interaction, therefore, is a continuous process of risk assessment. The exchange provides the baseline requirement through its sophisticated, standardized model. The broker, in its role as the ultimate guarantor of its clients’ positions, overlays its own analysis, creating a more conservative and specific margin requirement that reflects the full spectrum of risks inherent in a particular portfolio. This ensures that both the client and the firm are protected against events that lie in the blind spots of the standard models.

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## Strategy

The strategic interplay between a broker’s house margin policy and the foundational SPAN or TIMS models is a critical element of [capital efficiency](https://prime.greeks.live/area/capital-efficiency/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) and risk management for any institutional trader. Understanding this dynamic moves beyond a simple acknowledgment of the rules; it requires a strategic framework for portfolio construction and [broker selection](https://prime.greeks.live/area/broker-selection/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). The house policy is not merely a constraint; it is a signal from the broker about its own risk perceptions and operational tolerances. A sophisticated trader learns to interpret and integrate these signals into their trading strategy, optimizing their capital allocation while respecting the risk boundaries established by their clearing firm.

The core of this strategic consideration lies in the difference between the exchange’s view of risk and the broker’s view. The exchange’s model is a public utility, designed for systemic stability. The broker’s model is a private, competitive tool, designed for firm-level survival and profitability. This divergence creates opportunities and challenges.

For example, a trader employing a strategy that appears low-risk under SPAN might find it capital-intensive under a specific broker’s house rules if it involves, for instance, a high concentration in a single underlying. Conversely, a different broker, with a different risk model or client base, might view the same strategy more favorably. The choice of a clearing broker becomes a strategic decision, directly impacting the return on capital for a given [trading strategy](https://prime.greeks.live/area/trading-strategy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite).

> A trader’s strategy must account for the broker’s house margin policy as a key variable influencing capital efficiency and overall profitability.

The interaction can be conceptualized as a negotiation between the trader’s desired risk exposure and the broker’s capacity to absorb that risk. A trader running a highly diversified portfolio of liquid, standard products will likely find that their margin requirement is dictated almost entirely by the SPAN or TIMS calculation. Their strategy aligns perfectly with the assumptions of the standard model.

However, a trader specializing in strategies that exploit market niches ▴ such as selling far out-of-the-money options or taking large positions in less liquid contracts ▴ will find their capital requirements are heavily influenced by the broker’s house policy. The house rules are specifically designed to scrutinize these non-standard forms of risk.

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## Aligning Trading Strategy with Margin Policy

A trader has two primary levers to manage this interaction ▴ strategy modification and broker selection. Proactive management of the portfolio to align with a known house policy can significantly improve capital efficiency. This involves understanding the specific sensitivities of the broker’s risk engine.

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## How Can a Trader Adapt to a Broker’s House Policy?

Adapting to a broker’s house policy is an ongoing process of risk monitoring and portfolio adjustment. It requires a transparent relationship with the broker and a clear understanding of their specific risk sensitivities.

- **Managing Concentration** ▴ If a broker has a strict policy on position concentration, a trader might implement rules to spread their exposure across a wider range of underlyings or expiration dates. This diversification can reduce the impact of the house overlay, freeing up capital that would otherwise be tied to meeting a concentration charge.

- **Controlling Tail Risk Exposure** ▴ Traders who sell options, particularly deep out-of-the-money puts, are often subject to significant [house margin](https://prime.greeks.live/question/what-are-the-primary-differences-between-bilateral-margin-and-central-clearing-margin-protocols/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) add-ons. To manage this, a trader might systematically buy even further out-of-the-money options as a tail-risk hedge. While this adds a direct cost, it can reduce the overall margin requirement by more than the cost of the hedge, creating a net benefit to capital efficiency.

- **Optimizing for Liquidity** ▴ When a strategy involves less liquid products, a trader must factor in the potential for higher house margin. The strategic decision might be to accept the higher capital cost in exchange for the potential alpha from the illiquid product, or to shift the strategy to more liquid, exchange-traded equivalents where the margin treatment is more favorable.

The following table illustrates how different trading strategies might interact with a typical house margin policy, compared to the baseline SPAN requirement.

### Table 1 ▴ Strategic Interaction with Margin Policies

| Trading Strategy | Risk Profile under SPAN | Potential House Policy Trigger | Resulting Margin Impact |
| --- | --- | --- | --- |
| Diversified Index Options Spreads | Low. SPAN recognizes the risk offsets between long and short positions in a highly correlated underlying. | Minimal. This strategy aligns well with the assumptions of standard portfolio margining. | Margin requirement is likely to be at or very close to the SPAN minimum. |
| Concentrated Naked Short Put Writing in a Single Stock | Moderate. SPAN will calculate the worst-case loss based on its standard price and volatility shifts. | High Concentration. The position size may exceed the broker’s internal limits for a single name. Tail Risk is also a major factor. | Significant margin add-on. The house policy may double or triple the SPAN requirement to cover liquidation and gap risk. |
| Futures Calendar Spreads in an Illiquid Commodity | Low to Moderate. SPAN recognizes the partial offset between the different contract months. | Liquidity Risk. The broker is concerned about the ability to close the position without significant market impact. | Moderate margin add-on. The broker applies a liquidity premium to the standard SPAN calculation. |
| Cross-Asset Arbitrage (e.g. Equity Index vs. Bond Futures) | High. SPAN may not offer significant offsets between different asset classes. | Correlation Risk. The broker’s house model may be more skeptical of the historical correlation holding up during a crisis. | Variable impact. Some sophisticated brokers may have house policies that recognize this specific strategy and offer better margin terms than the default SPAN calculation. Others may be more punitive. |

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## Broker Selection as a Strategic Tool

The variance in house policies among brokers means that broker selection is a critical component of strategy implementation. A [prime brokerage](https://prime.greeks.live/area/prime-brokerage/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) relationship is a partnership. A trader needs a partner whose risk appetite and systems are aligned with their strategy. Some brokers may specialize in servicing high-volume, highly diversified quantitative funds and have house policies optimized for that business.

Their systems might be punitive to a concentrated, directional trader. Other brokers might cater specifically to commodity trading advisors (CTAs) and have more sophisticated models for handling calendar spreads and inter-commodity risk.

The due diligence process for selecting a broker should include a detailed discussion of their house margin policy. A prospective client can often provide a sample portfolio and ask the broker to run it through their risk system. This provides a concrete, quantitative comparison of how different brokers will treat the same strategy. The goal is to find a broker whose house policy is not an obstacle to be overcome, but a reasonable and transparent framework that allows the trader to deploy their strategy effectively and efficiently.

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## Execution

The execution of a margin policy is a technologically intensive, real-time process that forms the operational core of a brokerage firm’s risk management. For the institutional trader, understanding the mechanics of this process is vital for managing daily capital requirements and avoiding unexpected margin calls. The process begins the moment a trade is executed and continues in a perpetual cycle of revaluation as market conditions change. It is a system of data ingestion, calculation, and enforcement that integrates exchange-level inputs with the broker’s proprietary risk logic.

At the heart of this system is a powerful risk engine. This engine is responsible for a series of complex calculations that must be performed with minimal latency. It takes in real-time market data (prices, volatilities), the daily risk parameter files from the exchanges (for SPAN), and the client’s current position data. It then runs a multi-layered simulation.

The first pass calculates the statutory margin requirement according to the relevant exchange methodology (SPAN or TIMS). The engine then performs a second pass, applying the firm’s own house rules. This could involve running additional, more severe stress scenarios, checking for breaches of concentration limits, or applying liquidity add-ons based on the specific contracts in the portfolio.

> The operational execution of margin policy is a real-time synthesis of exchange-mandated calculations and proprietary, broker-specific risk analysis.

The final margin requirement for the client is the greater of the exchange-mandated figure or the figure generated by the house policy. This result is then compared against the client’s available equity. Any shortfall triggers a [margin call](https://prime.greeks.live/area/margin-call/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). This entire process is automated and runs continuously throughout the trading day.

Sophisticated brokers provide their clients with tools that offer a real-time or near-real-time view into this calculation, allowing traders to conduct “what-if” analysis to see how a potential new trade would impact their margin requirements before they execute it. This pre-trade analysis is a critical tool for capital management.

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## The Operational Playbook

From a practical standpoint, the interaction between a house policy and the standard margin models follows a clear operational sequence. This sequence is a continuous loop of data processing and risk assessment that dictates the flow of capital between the client, the broker, and the clearinghouse.

- **Position Ingestion** ▴ The process begins with the risk engine receiving an updated position file for a client account. This happens at the start of the trading day and is updated in real-time as new trades are executed.

- **Market Data Integration** ▴ The engine continuously pulls in real-time market data, including the current prices of all futures and options contracts and their implied volatilities.

- **Statutory Margin Calculation** ▴ The system first calculates the margin based on the exchange’s required methodology. For a portfolio of futures and their options, this is typically CME SPAN. The engine uses the daily SPAN risk parameter file provided by the exchange, which contains the necessary price scan ranges and volatility shifts.

- **House Policy Overlay** ▴ Immediately following the statutory calculation, the engine applies the broker’s proprietary risk rules. This is the “house check.” This stage can involve several sub-processes:

<li>**Concentration Check** ▴ The system checks if the client’s position in any single underlying exceeds a predefined percentage of the total open interest or a fixed [notional value](https://prime.greeks.live/area/notional-value/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) limit. If it does, a concentration “add-on” is calculated.

- **Liquidity Check** ▴ The system identifies positions in contracts flagged as illiquid. A predefined liquidity charge is added to the margin for these positions.

- **Proprietary Stress Tests** ▴ The engine re-values the portfolio against a set of house-defined extreme market scenarios (e.g. a 40% market crash, a doubling of volatility). These scenarios are more severe than the standard SPAN scenarios.

</li>
- **Final Margin Determination** ▴ The system compares the result from Step 3 (Statutory Margin) with the result from Step 4 (House Margin). The client’s required margin is set at the higher of the two values.

- **Equity Reconciliation and Enforcement** ▴ The final required margin is compared to the client’s available account equity. If equity is less than the requirement, a margin call is automatically generated and sent to the client. The risk management department of the brokerage is alerted to the deficit.

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## Quantitative Modeling and Data Analysis

To make this process concrete, let’s analyze a hypothetical portfolio. The portfolio consists of positions in S&P 500 E-mini futures (ES) and options on those futures. The broker has a house policy that triggers under two conditions ▴ 1) if the notional value of short options on a single underlying exceeds $50 million, a 5% tail risk add-on is applied, and 2) if the total position in a single futures contract exceeds 1,000 contracts, a concentration charge of 2% of the notional value is applied.

The following table breaks down the margin calculation for this portfolio, showing the base SPAN calculation and the impact of the house policy overlay.

### Table 2 ▴ Margin Calculation with House Policy Overlay

| Position | Quantity | Market Price | Notional Value | Component SPAN Margin | House Policy Trigger | House Margin Add-on |
| --- | --- | --- | --- | --- | --- | --- |
| Long ES Futures | 500 | 5,000 | $125,000,000 | $12,500,000 | None | $0 |
| Short 4500 Puts | -2,000 | $50 | -$45,000,000 (Strike x 100 x Qty) | $8,000,000 (as a portfolio) | Tail Risk (Short option notional is high) | $2,250,000 (5% of short put notional) |
| Total Portfolio | | | | $20,500,000 | | $2,250,000 |

In this example, the standard SPAN calculation for the entire portfolio is $20.5 million. However, the broker’s house policy identifies the large short put position as a significant source of tail risk. It applies a 5% add-on to the notional value of this position, resulting in an additional margin requirement of $2.25 million. The final margin required from the client is therefore $22.75 million.

The house policy has increased the total margin requirement by over 10% compared to the exchange minimum. This additional capital serves as a buffer for the broker against a sudden market crash that could cause the value of the short puts to explode beyond the losses modeled by the standard SPAN scenarios.

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## References

- “Overview of Margin Methodologies.” IBKR Guides, 2024.

- “SPAN Margin ▴ Definition, How It Works, Advantages.” Investopedia, 2023.

- Morse, Robert, et al. “Portfolio Margin vs SPAN Margin.” Elite Trader, 2020.

- “Hanweck Portfolio Margin.” Cboe Global Markets, 2023.

- “Margins Handbook.” National Futures Association, 2018.

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## Reflection

The architecture of margin is a reflection of the architecture of risk itself. The interaction between a foundational protocol like SPAN and a proprietary house policy reveals the layered nature of modern financial risk management. The knowledge of this system provides more than just the ability to meet margin calls. It offers a framework for thinking about portfolio construction, capital allocation, and the strategic selection of institutional partners.

How does your current operational framework account for the signals embedded within your broker’s margin requirements? Does it treat margin as a simple cost of doing business, or as a dynamic source of intelligence about the perceived risks in your own strategy? The answers to these questions can define the boundary between standard execution and superior capital efficiency.

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## Glossary

<a href="https://prime.greeks.live/area/risk-management/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Risk Management

Meaning ▴ Risk Management, within the cryptocurrency trading domain, encompasses the comprehensive process of identifying, assessing, monitoring, and mitigating the multifaceted financial, operational, and technological exposures inherent in digital asset markets. </a><a href="https://prime.greeks.live/area/derivatives/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Intricate metallic mechanisms portray a proprietary matching engine or execution management system. Its robust structure enables algorithmic trading and high-fidelity execution for institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-market-microstructure.jpg)

## Derivatives

Meaning ▴ Derivatives, within the context of crypto investing, are financial contracts whose value is fundamentally derived from the price movements of an underlying digital asset, such as Bitcoin or Ethereum. </a><a href="https://prime.greeks.live/area/house-margin-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Sleek, dark components with a bright turquoise data stream symbolize a Principal OS enabling high-fidelity execution for institutional digital asset derivatives. This infrastructure leverages secure RFQ protocols, ensuring precise price discovery and minimal slippage across aggregated liquidity pools, vital for multi-leg spreads](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-rfq-protocol-systemic-execution-interface.jpg)

## House Margin Policy

Meaning ▴ House Margin Policy, within a crypto exchange or institutional trading firm, refers to the specific set of rules established by that entity governing the collateral required for margin trading and leveraged positions. </a><a href="https://prime.greeks.live/question/what-are-the-primary-data-requirements-for-building-an-effective-in-house-transaction-cost-analysis-system/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A chrome cross-shaped central processing unit rests on a textured surface, symbolizing a Principal's institutional grade execution engine. It integrates multi-leg options strategies and RFQ protocols, leveraging real-time order book dynamics for optimal price discovery in digital asset derivatives, minimizing slippage and maximizing capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/principals-high-fidelity-rfq-execution-digital-asset-derivatives-hub.jpg)

## House Policy

A TCA system's efficacy depends on fusing internal trade data with high-fidelity, time-stamped market data to benchmark performance. </a><a href="https://prime.greeks.live/area/span/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A transparent sphere, representing a digital asset option, rests on an aqua geometric RFQ execution venue. This proprietary liquidity pool integrates with an opaque institutional grade infrastructure, depicting high-fidelity execution and atomic settlement within a Principal's operational framework for Crypto Derivatives OS](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-system-prime-os.jpg)

## Span

Meaning ▴ SPAN (Standard Portfolio Analysis of Risk), in the context of institutional crypto options trading and risk management, is a comprehensive portfolio margining system designed to calculate initial margin requirements by assessing the overall risk of an entire portfolio of derivatives. </a><a href="https://prime.greeks.live/area/tims/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstract geometric representation of an institutional RFQ protocol for digital asset derivatives. Two distinct segments symbolize cross-market liquidity pools and order book dynamics](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-protocol-2.jpg)

## Tims

Meaning ▴ TIMS, an acronym for the Theoretical Intermarket Margin System, is a highly sophisticated portfolio margining methodology primarily employed by clearing organizations to meticulously calculate margin requirements for complex portfolios of derivatives. </a><a href="https://prime.greeks.live/area/futures-and-options/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A robust, dark metallic platform, indicative of an institutional-grade execution management system. Its precise, machined components suggest high-fidelity execution for digital asset derivatives via RFQ protocols](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-platform-high-fidelity-price-discovery-and-atomic-settlement-infrastructure.jpg)

## Futures and Options

Meaning ▴ Futures and Options are derivative financial instruments whose value is derived from an underlying asset, specifically cryptocurrencies such as Bitcoin or Ethereum. </a><a href="https://prime.greeks.live/area/margin-requirement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sophisticated metallic instrument, a precision gauge, indicates a calibrated reading, essential for RFQ protocol execution. Its intricate scales symbolize price discovery and high-fidelity execution for institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-platform.jpg)

## Margin Requirement

Meaning ▴ Margin Requirement in crypto trading dictates the minimum amount of collateral, typically denominated in a cryptocurrency or fiat currency, that a trader must deposit and continuously maintain with an exchange or broker to support leveraged positions. </a><a href="https://prime.greeks.live/area/options/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, precision-engineered device with a split-screen interface displaying implied volatility and price discovery data for digital asset derivatives. This institutional grade module optimizes RFQ protocols, ensuring high-fidelity execution and capital efficiency within market microstructure for multi-leg spreads](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-module.jpg)

## Options

Meaning ▴ Options are financial derivative contracts that grant the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price (strike price) on or before a particular date (expiration date). </a><a href="https://prime.greeks.live/area/futures/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, multi-faceted plane represents a Principal's operational framework and Execution Management System. A central glossy black sphere signifies a block trade digital asset derivative, executed with atomic settlement via an RFQ protocol's private quotation](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-derivatives-rfq-principal-os-high-fidelity-execution.jpg)

## Futures

Meaning ▴ Futures are standardized legal contracts to buy or sell a specific underlying asset at a predetermined price on a specified date in the future. </a><a href="https://prime.greeks.live/area/span-margin/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A central RFQ engine flanked by distinct liquidity pools represents a Principal's operational framework. This abstract system enables high-fidelity execution for digital asset derivatives, optimizing capital efficiency and price discovery within market microstructure for institutional trading](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-engine-optimal-execution-for-digital-asset-derivatives.jpg)

## Span Margin

Meaning ▴ SPAN Margin, an acronym for Standard Portfolio Analysis of Risk Margin, is a portfolio-based risk management system developed by the Chicago Mercantile Exchange (CME) that calculates margin requirements for options, futures, and other derivatives. </a><a href="https://prime.greeks.live/question/what-are-the-primary-differences-between-bilateral-margin-and-central-clearing-margin-protocols/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek metallic teal execution engine, representing a Crypto Derivatives OS, interfaces with a luminous pre-trade analytics display. This abstract view depicts institutional RFQ protocols enabling high-fidelity execution for multi-leg spreads, optimizing market microstructure and atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/advanced-institutional-digital-asset-derivatives-rfq-protocol-engine-for-high-fidelity-execution-and-market-microstructure-analysis.jpg)

## Margin Policy

Bilateral margin involves direct, customized risk agreements, while central clearing novates trades to a central entity, standardizing and mutualizing risk. </a><a href="https://prime.greeks.live/area/concentration-risk/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Precision cross-section of an institutional digital asset derivatives system, revealing intricate market microstructure. Toroidal halves represent interconnected liquidity pools, centrally driven by an RFQ protocol](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-prime-os-architecture-revealing-precision-rfq-protocol-engine-for-optimal-high-fidelity-execution-and-latent-liquidity-aggregation.jpg)

## Concentration Risk

Meaning ▴ Concentration Risk, within the context of crypto investing and institutional options trading, refers to the heightened exposure to potential losses stemming from an overly significant allocation of capital or operational reliance on a single digital asset, protocol, counterparty, or market segment. </a><a href="https://prime.greeks.live/area/span-calculation/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A central RFQ aggregation engine radiates segments, symbolizing distinct liquidity pools and market makers. This depicts multi-dealer RFQ protocol orchestration for high-fidelity price discovery in digital asset derivatives, highlighting diverse counterparty risk profiles and algorithmic pricing grids](https://options.greeks.live/wp-content/uploads/2025/07/centralized-digital-asset-rfq-orchestration-for-multi-venue-liquidity-aggregation-and-high-fidelity-execution-across-diverse-counterparties.jpg)

## Span Calculation

Meaning ▴ SPAN (Standard Portfolio Analysis of Risk) Calculation is a standardized methodology for computing margin requirements for portfolios of derivatives, particularly relevant for institutional crypto options and futures. </a><a href="https://prime.greeks.live/area/liquidity-risk/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstract visualization of an institutional-grade digital asset derivatives execution engine. Its segmented core and reflective arcs depict advanced RFQ protocols, real-time price discovery, and dynamic market microstructure, optimizing high-fidelity execution and capital efficiency for block trades within a Principal's framework](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-engine-interface.jpg)

## Liquidity Risk

Meaning ▴ Liquidity Risk, in financial markets, is the inherent potential for an asset or security to be unable to be bought or sold quickly enough at its fair market price without causing a significant adverse impact on its valuation. </a><a href="https://prime.greeks.live/question/what-are-the-primary-data-requirements-for-building-an-effective-in-house-transaction-cost-analysis-system/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A central, metallic, multi-bladed mechanism, symbolizing a core execution engine or RFQ hub, emits luminous teal data streams. These streams traverse through fragmented, transparent structures, representing dynamic market microstructure, high-fidelity price discovery, and liquidity aggregation](https://options.greeks.live/wp-content/uploads/2025/07/principal-grade-digital-asset-derivatives-rfq-protocol-engine-facilitating-high-fidelity-execution-and-optimal-price-discovery-across-fragmented-market-microstructure.jpg)

## House Policies

A TCA system's efficacy depends on fusing internal trade data with high-fidelity, time-stamped market data to benchmark performance. </a><a href="https://prime.greeks.live/area/tail-risk/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A gold-hued precision instrument with a dark, sharp interface engages a complex circuit board, symbolizing high-fidelity execution within institutional market microstructure. This visual metaphor represents a sophisticated RFQ protocol facilitating private quotation and atomic settlement for digital asset derivatives, optimizing capital efficiency and mitigating counterparty risk](https://options.greeks.live/wp-content/uploads/2025/08/institutional-grade-precision-execution-engine-optimizing-digital-asset-derivatives-rfq-protocols-within-market-microstructure.jpg)

## Tail Risk

Meaning ▴ Tail Risk, within the intricate realm of crypto investing and institutional options trading, refers to the potential for extreme, low-probability, yet profoundly high-impact events that reside in the far "tails" of a probability distribution, typically resulting in significantly larger financial losses than conventionally anticipated under normal market conditions. </a><a href="https://prime.greeks.live/area/capital-efficiency/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A central hub with a teal ring represents a Principal's Operational Framework. Interconnected spherical execution nodes symbolize precise Algorithmic Execution and Liquidity Aggregation via RFQ Protocol](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-microstructure-prime-os-price-liquidity-alpha.jpg)

## Capital Efficiency

Meaning ▴ Capital efficiency, in the context of crypto investing and institutional options trading, refers to the optimization of financial resources to maximize returns or achieve desired trading outcomes with the minimum amount of capital deployed. </a><a href="https://prime.greeks.live/area/broker-selection/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Sharp, intersecting elements, two light, two teal, on a reflective disc, centered by a precise mechanism. This visualizes institutional liquidity convergence for multi-leg options strategies in digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-block-trade-execution.jpg)

## Broker Selection

Meaning ▴ Broker Selection refers to the systematic process by which an institutional investor or trading entity chooses a suitable intermediary to execute cryptocurrency trades or access financial services. </a><a href="https://prime.greeks.live/area/trading-strategy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstract geometric forms, symbolizing bilateral quotation and multi-leg spread components, precisely interact with robust institutional-grade infrastructure. This represents a Crypto Derivatives OS facilitating high-fidelity execution via an RFQ workflow, optimizing capital efficiency and price discovery](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-engine-infrastructure.jpg)

## Trading Strategy

Meaning ▴ A trading strategy, within the dynamic and complex sphere of crypto investing, represents a meticulously predefined set of rules or a comprehensive plan governing the informed decisions for buying, selling, or holding digital assets and their derivatives. </a><a href="https://prime.greeks.live/question/what-are-the-primary-differences-between-bilateral-margin-and-central-clearing-margin-protocols/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A central teal sphere, secured by four metallic arms on a circular base, symbolizes an RFQ protocol for institutional digital asset derivatives. It represents a controlled liquidity pool within market microstructure, enabling high-fidelity execution of block trades and managing counterparty risk through a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-hub-1.jpg)

## House Margin

Bilateral margin involves direct, customized risk agreements, while central clearing novates trades to a central entity, standardizing and mutualizing risk. </a><a href="https://prime.greeks.live/area/prime-brokerage/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precision-engineered, multi-layered system component, symbolizing the intricate market microstructure of institutional digital asset derivatives. Two distinct probes represent RFQ protocols for price discovery and high-fidelity execution, integrating latent liquidity and pre-trade analytics within a robust Prime RFQ framework, ensuring best execution](https://options.greeks.live/wp-content/uploads/2025/08/digital-asset-derivatives-rfq-protocols-high-fidelity-execution.jpg)

## Prime Brokerage

Meaning ▴ Prime Brokerage, in the evolving context of institutional crypto investing and trading, encompasses a comprehensive, integrated suite of services meticulously offered by a singular entity to sophisticated clients, such as hedge funds and large asset managers. </a><a href="https://prime.greeks.live/area/margin-call/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, split capsule object reveals an internal glowing teal light connecting its two halves, symbolizing a secure, high-fidelity RFQ protocol facilitating atomic settlement for institutional digital asset derivatives. This represents the precise execution of multi-leg spread strategies within a principal's operational framework, ensuring optimal liquidity aggregation](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-system-2.jpg)

## Margin Call

Meaning ▴ A Margin Call, in the context of crypto institutional options trading and leveraged positions, is a demand from a broker or a decentralized lending protocol for an investor to deposit additional collateral to bring their margin account back up to the minimum required level. </a><a href="https://prime.greeks.live/area/notional-value/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Interlocking dark modules with luminous data streams represent an institutional-grade Crypto Derivatives OS. It facilitates RFQ protocol integration for multi-leg spread execution, enabling high-fidelity execution, optimal price discovery, and capital efficiency in market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution.jpg)

## Notional Value

Meaning ▴ Notional Value, within the analytical framework of crypto investing, institutional options trading, and derivatives, denotes the total underlying value of an asset or contract upon which a derivative instrument's payments or obligations are calculated. </a>

**Tags:** [Prime Brokerage](https://options.greeks.live/area/prime-brokerage/), [Derivatives](https://options.greeks.live/area/derivatives/), [Futures](https://options.greeks.live/area/futures/), [Options](https://options.greeks.live/area/options/), [Margin Call](https://options.greeks.live/area/margin-call/), [SPAN](https://options.greeks.live/area/span/)	

## Discover More

- 
### [What Are the Key Differences between Regulatory Margin and House Margin in Prime Brokerage?](https://options.greeks.live/question/what-are-the-key-differences-between-regulatory-margin-and-house-margin-in-prime-brokerage/)
![A diagonal metallic framework supports two dark circular elements with blue rims, connected by a central oval interface. This represents an institutional-grade RFQ protocol for digital asset derivatives, facilitating block trade execution, high-fidelity execution, dark liquidity, and atomic settlement on a Prime RFQ.](https://options.greeks.live/wp-content/uploads/2025/07/optimized-institutional-digital-asset-derivatives-trading-system-rfq-protocols-and-atomic-settlement.jpg)

Regulatory margin is the legal minimum collateral; house margin is the broker's discretionary risk overlay, with the higher of the two prevailing.

- 
### [How Does Increased Capital Efficiency from Portfolio Margining Impact a Firm’s Trading Strategy?](https://options.greeks.live/question/how-does-increased-capital-efficiency-from-portfolio-margining-impact-a-firms-trading-strategy/)
![Two abstract, polished components, diagonally split, reveal internal translucent blue-green fluid structures. This visually represents the Principal's Operational Framework for Institutional Grade Digital Asset Derivatives. It illustrates dynamic Liquidity Pool management, High-Fidelity Execution via RFQ protocols, and the intricate Market Microstructure driving Price Discovery and Atomic Settlement.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-rfq-execution-prime-os-liquidity-framework.jpg)

Portfolio margining unlocks capital by aligning collateral with net portfolio risk, enabling superior trading strategy deployment.

- 
### [How Does the Shift from SPAN to VaR Impact a Firm’s Treasury and Capital Management Functions?](https://options.greeks.live/question/how-does-the-shift-from-span-to-var-impact-a-firms-treasury-and-capital-management-functions/)
![A vertically stacked assembly of diverse metallic and polymer components, resembling a modular lens system, visually represents the layered architecture of institutional digital asset derivatives. Each distinct ring signifies a critical market microstructure element, from RFQ protocol layers to aggregated liquidity pools, ensuring high-fidelity execution and capital efficiency within a Prime RFQ framework.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-execution-stack.jpg)

The shift to VaR transforms margin calculation into a dynamic, probabilistic system, demanding greater treasury agility and capital precision.

- 
### [How Does Pre-Trade Margin Simulation Impact Algorithmic Trading Strategies?](https://options.greeks.live/question/how-does-pre-trade-margin-simulation-impact-algorithmic-trading-strategies/)
![A central, symmetrical, multi-faceted mechanism with four radiating arms, crafted from polished metallic and translucent blue-green components, represents an institutional-grade RFQ protocol engine. Its intricate design signifies multi-leg spread algorithmic execution for liquidity aggregation, ensuring atomic settlement within crypto derivatives OS market microstructure for prime brokerage clients.](https://options.greeks.live/wp-content/uploads/2025/07/precision-rfq-engine-for-crypto-derivatives-liquidity-aggregation.jpg)

Pre-trade margin simulation integrates capital cost directly into algorithmic logic, enabling dynamic, resource-aware execution strategies.

- 
### [What Are the Specific Eligibility Requirements for a Portfolio Margin Account?](https://options.greeks.live/question/what-are-the-specific-eligibility-requirements-for-a-portfolio-margin-account/)
![A dynamic visual representation of an institutional trading system, featuring a central liquidity aggregation engine emitting a controlled order flow through dedicated market infrastructure. This illustrates high-fidelity execution of digital asset derivatives, optimizing price discovery within a private quotation environment for block trades, ensuring capital efficiency.](https://options.greeks.live/wp-content/uploads/2025/07/principal-os-driving-high-fidelity-execution-for-digital-asset-derivatives-through-optimized-rfq-protocols-and-smart-order-routing.jpg)

A portfolio margin account requires high-level options approval and significant capital, enabling superior leverage through a holistic, risk-based margin calculation.

- 
### [What Are the Primary Scenarios Where Isolated Margin Is Preferable to Portfolio Margin?](https://options.greeks.live/question/what-are-the-primary-scenarios-where-isolated-margin-is-preferable-to-portfolio-margin/)
![A central glowing blue mechanism with a precision reticle is encased by dark metallic panels. This symbolizes an institutional-grade Principal's operational framework for high-fidelity execution of digital asset derivatives. It embodies RFQ processing, enabling price discovery within a deep liquidity pool, optimizing market microstructure.](https://options.greeks.live/wp-content/uploads/2025/07/precision-core-enabling-institutional-digital-asset-derivatives-rfq-execution.jpg)

Isolated margin is preferable for containing the risk of a single, highly speculative position, thereby protecting the core portfolio's capital.

- 
### [What Are the Specific Risks Associated with the Higher Leverage in a Portfolio Margin Account?](https://options.greeks.live/question/what-are-the-specific-risks-associated-with-the-higher-leverage-in-a-portfolio-margin-account/)
![A polished, dark teal institutional-grade mechanism reveals an internal beige interface, precisely deploying a metallic, arrow-etched component. This signifies high-fidelity execution within an RFQ protocol, enabling atomic settlement and optimized price discovery for institutional digital asset derivatives and multi-leg spreads, ensuring minimal slippage and robust capital efficiency.](https://options.greeks.live/wp-content/uploads/2025/08/quantitative-finance-driven-rfq-workflow-for-best-execution-in-digital-assets.jpg)

A portfolio margin account's higher leverage introduces systemic risks of amplified losses and rapid, forced liquidation driven by its dynamic, stress-test-based risk calculations.

- 
### [How Do Broker-Dealer House Rules Affect Portfolio Margin Requirements beyond FINRA Minimums?](https://options.greeks.live/question/how-do-broker-dealer-house-rules-affect-portfolio-margin-requirements-beyond-finra-minimums/)
![Precision interlocking components with exposed mechanisms symbolize an institutional-grade platform. This embodies a robust RFQ protocol for high-fidelity execution of multi-leg options strategies, driving efficient price discovery and atomic settlement. It optimizes market microstructure for digital asset derivatives.](https://options.greeks.live/wp-content/uploads/2025/07/precision-institutional-digital-asset-derivatives-execution-platform.jpg)

Platform-specific risk engines are the true arbiters of capital efficiency in crypto derivatives, defining margin beyond any baseline model.

- 
### [How Does Portfolio Margining Quantitatively Reduce Collateral Requirements for a Collar?](https://options.greeks.live/question/how-does-portfolio-margining-quantitatively-reduce-collateral-requirements-for-a-collar/)
![A precision optical system with a reflective lens embodies the Prime RFQ intelligence layer. Gray and green planes represent divergent RFQ protocols or multi-leg spread strategies for institutional digital asset derivatives, enabling high-fidelity execution and optimal price discovery within complex market microstructure.](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-intelligent-core-driving-digital-asset-derivatives-rfq-protocols-high-fidelity-execution-across-diverse-liquidity-pools-for-optimal-price-discovery.jpg)

Portfolio margining models a collar's net risk across market shocks, demanding collateral only for the true maximum potential loss.

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---

**Original URL:** https://options.greeks.live/question/how-does-a-brokers-house-margin-policy-interact-with-span-or-tims/
