Take advantage of the portfolio-based margin model with risk netting benefits across product types and positions

The portfolio-based margin (PBM) model is an alternative to the standard margin model offered by Saxo to professional clients.

Instead of applying a predefined margin requirement to each position or strategy, the portfolio-based model calculates the overall risk level of a portfolio based on individual risk factors. The model then applies a margin requirement to the total exposure in any given underlying asset.

How do I enable portfolio-based margin?

Instrument types covered:

  • Stocks
  • Stock options
  • CFDs
  • Futures
  • Futures options
  • Index options
  • Graph1

    Standard margin model

    This model recognises a set number of simple strategies combining up to two different positions in any given underlying asset. Complex combinations of positions across multiple asset classes and option legs are not recognised and do not receive netting benefits.

  • Graph2

    Portfolio-based margin model

    This model calculates risk scenarios on the combined exposure to any given underlying risk factor. It then applies margin requirements based on the overall exposure in any given underlying asset.

Who will benefit from portfolio-based margin?

Who will benefit from portfolio-based margin?

As a professional client, you might benefit from using the portfolio-based margin (PBM) model if you:

  • Combine many different positions through a large spectrum of instrument types;

  • Run option strategies that are not currently recognised by the standard margin model;

  • Trade multileg option strategies, such as butterflies and condors;

  • Trade CFDs combined with options in the same underlying risk factor;

  • Trade calendar spreads on index options and CFDs to achieve netting and margin reductions.

How does portfolio-based margin work?

How does portfolio-based margin work?

The model creates a link between instruments based on the same underlying asset or “risk factor” (e.g. equity instruments such as Tesla, the S&P500 index or ETFs). It recognises related underlying risk factors across instrument types and calculates the margin requirement by stressing all the positions in a risk factor and estimating the greatest possible loss on the combined exposure.

What are the risks of the portfolio-based margin model?

What are the risks of the portfolio-based margin model?

Please be aware that the portfolio-based margin model entails certain risks. Enabling it on your account may:

  • Offer higher leverage than the standard margin model, meaning losses may be amplified;

  • Increase fluctuations of margin utilisation due to market conditions;

  • Affect the stop-out method on the account.

How do I enable portfolio-based margin?

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