The Chicago Board Options Exchange (CBOE) says that the Securities and Exchange Commission (SEC) has approved amendments to CBOE rules that allow for expanded portfolio margining for customer accounts. The effective date of the amendments is 2 April 2007.
The action expands the scope of products eligible for portfolio margining to include equities, equity options, narrow-based index options, certain security futures products (such as single stock futures), and unlisted derivatives. The SEC approved portfolio margining for broad-based index options in July 2005. US futures markets and most European and Asian exchanges for many years have employed risk-based margining similar to CBOE’s new rules.
“CBOE’s portfolio margining rules makes the US equity markets much more competitive in a world where the lines continue to blur between product classes, where cross-border trading is common, and where capital moves quickly to the most efficient markets,” says William J. Brodsky, the Chairman and Chief Executive Officer of CBOE. “True risk-based margining frees up a tremendous amount of capital, allowing investors to more appropriately allocate assets in their accounts. The benefits to customers from these changes are profound and will revolutionize our market place.”