Which exchanges use span

Over the years, SPAN has become the industry standard for portfolio risk assessment. It is the official performance bond margin mechanism of 50 registered exchanges , clearing organizations , service bureaus and regulatory agencies throughout the world.

The SPAN software is used by futures commission merchants FCMs , investment banks , hedge funds , research organizations, risk managers , brokerage firms and individual investors everywhere. Although originally designed for use with derivatives, it is now widely used to assess risk for many different types of financial instruments.

Set to be tested in the second half of , SPAN 2 is designed to provide enhanced risk management in a single interface with new modeling and margin replication enhancements. Set to launch in , SPAN 2 will still be based on Value at Risk, and use historical data to model gains or losses in certain scenarios. It will also incorporate more granular and dynamic adjustments to margins by product and portfolio. It will also include different risk factors such as market risk, liquidity and concentration.

It will be phased in over several years. PC-SPAN is single-user desktop software that enables a user to enter positions manually or by using scripting language to automate the position entry process. Actively scan device characteristics for identification. Use precise geolocation data. Select personalised content. Create a personalised content profile. Measure ad performance.

Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. Many of today's stock option traders may not realize that margin rules differ across the various option exchanges. The latter two use a system known as standardized portfolio analysis of risk, or SPAN , the world's leading margin system, adopted by most options and futures exchanges around the world.

Let's look at the general idea behind margin and what SPAN futures and option margin are. SPAN provides futures and commodity option strategists with a key advantage: more bang for their margin buck. See also: Investopedia Academy's Options for Beginners. Option margin, very simply, is the money that a trader must deposit into his or her trading account in order to trade options. This is not the same as margining stock. Margin for stocks is actually a loan to you from your broker so that you can buy more stock with less available capital.

Margin for options on futures is a performance bond deposit that earns interest because it is usually held in the form of short-term Treasury bills. Buying options outright typically does not require any deposit of margin because the maximum risk is what you pay for the option.

For our purposes, margin is what the broker requires you to have in your account if you want to implement an option writing strategy. For a typical "one-lot" i. A good rule of thumb is that the ratio of margin to net premium collected should be 2-to That is, you should try to find option trades that give you a net premium that is at least one-half the initial margin costs.

One additional point about option margin is that it is not fixed. In other words, initial margin is the amount required to open a position, but that amount changes every day with the market. It can go up or down depending on changes in the underlying asset, time to expiration and levels of volatility. SPAN margin, which is the margin system developed by the Chicago Mercantile Exchange and used by all traders of options on futures, can help explain how this movement works.

SPAN margin is considered by many to be the superior margin system available. Collateral management. Entitlements from assets posted by CMs. Reporting of financial information. Information disclosure policy. Derivatives market Regulated market OTC. Organised trading Rules Resolutions. Non-organised trading Rules Resolutions.

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