Margin netting

There is margin netting between long and short positions in the same margin account (i.e. the same instrument type) but there is no margin netting across positions in different margin accounts.

For instance, there is margin netting between a long Bitcoin-Dollar Futures position in one maturity and a short Bitcoin-Dollar Futures position in another maturity. The Total Margin Requirement will then be calculated as:

Total Margin Requirement = Max(Margin Long Positions, Margin Short Positions)

This means that the margin requirement of only long OR short positions is counted, whichever is greater. This applies to all margin parameters (i.e. Initial Margin and Maintenance Margin).

Why is this useful? Margin netting allows to efficiently exploit price differences across maturities. For instance, if you think that the price of Futures A is too high compared to Futures B, you could put on a short position in A and a long position in B. This will turn a profit if the difference decreases. Margin netting ensures that margin requirements for this position are not excessive.