Portfolio Margin Mode: Cross-Margin Trading (Risk Unit Merge)

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In today’s fast-evolving digital asset markets, advanced traders demand more sophisticated tools to optimize capital efficiency and manage risk across multiple instruments. Portfolio margin mode is a cutting-edge solution that unifies spot, margin, futures, and options trading under a single risk-adjusted framework. By leveraging cross-margin principles and dynamic risk modeling, this system enables traders to reduce margin requirements while maintaining robust risk controls.

This comprehensive guide explores how portfolio margin mode works, who qualifies, how margin is calculated, and what happens during liquidation. We’ll also walk through real-world scenarios and key risk factors, helping you make informed decisions in complex market environments.

What Is Portfolio Margin Mode?

Portfolio margin mode allows traders to use a single unified account for spot, margin, perpetual futures, expiry futures, and options trading. Unlike isolated or cross-margin models limited to specific product types, portfolio margin evaluates your entire position set using a risk-based model that determines required margin based on potential losses under stressed market conditions.

This holistic approach considers all positions — long, short, hedged, or speculative — and applies advanced stress testing to calculate the minimum margin needed. As a result, traders benefit from:

All equity values are converted into USD equivalents using real-time indices and discount rates, enabling seamless cross-currency margining.

👉 Discover how portfolio margin can boost your trading efficiency today.

Who Can Use Portfolio Margin Mode?

To qualify for portfolio margin mode, traders must meet two key criteria:

  1. Maintain a minimum net equity of $10,000 USD
  2. Acknowledge understanding of portfolio margin mechanics

These requirements ensure only experienced traders with sufficient capital can access this advanced feature. The system automatically converts cryptocurrency balances into USD-equivalent values for margin calculations, aligning with multi-currency margin principles.

How Risk Offsetting Works: Risk Unit Merge

At the heart of portfolio margin is the risk unit merge mechanism. Instruments tied to the same underlying asset — such as ETH — are grouped into a single risk unit regardless of settlement currency or instrument type.

For example, the following positions would be merged under one ETH risk unit:

Automatic Spot Inclusion

In upgraded portfolio margin mode, spot assets are automatically included in their corresponding risk unit. If you hold both ETH spot and short ETH derivatives, the system recognizes the hedge and reduces required margin accordingly.

This eliminates manual hedging setup and ensures optimal margin treatment when positions naturally offset each other.

How Is Portfolio Margin Calculated?

The portfolio margin model uses two core components: Maintenance Margin Requirement (MMR) and Initial Margin Requirement (IMR).

Step 1: Derivatives MMR by Risk Unit

Each risk unit undergoes rigorous stress testing across multiple market scenarios. The MMR is determined by simulating worst-case losses under seven distinct risk factors (MR1–MR9), then selecting the highest outcome.

Key Risk Factors:

Derivatives MMR = Max((Max(Spot shock, Theta decay, Extreme move) + Basis risk + Vega risk + Interest rate risk + Stablecoin depegging risk), Adjusted minimum charge)

Step 2: Borrowing Margin (MR8)

Potential borrowing occurs when your available balance in a given currency isn’t enough to cover obligations like fees, losses, or order freezes — even if total portfolio equity remains healthy.

Borrowing MMR = Potential borrowing × Currency’s tier-based MMR percentage
Borrowing IMR = Potential borrowing / Currency’s borrow leverage

Auto-borrow mode allows continued trading when local currency equity is insufficient but overall USD-equivalent equity is adequate.

👉 See how auto-borrow enhances flexibility without compromising control.

Core Components of Portfolio Margin

Spot in Use Calculation

Spot assets only count toward margin reduction when they hedge derivatives within the same risk unit. The formula varies based on equity sign and derivative delta:

Final Margin Formula

This structure ensures conservative initial margins while allowing dynamic adjustments as market conditions evolve.

FAQ: Frequently Asked Questions

Q1: Can I switch back to isolated margin from portfolio margin?

Yes. You can change your margin mode at any time, provided all positions are closed or meet eligibility criteria for transfer. Note that switching may affect margin requirements and liquidation risks.

Q2: How does stablecoin depegging affect my portfolio?

If USDT or USDC depegs from USD, MR9 activates to assess cross-currency hedging exposure. Large unhedged deltas between stablecoins trigger higher margin charges to cover potential losses during devaluation events.

Q3: What happens if my maintenance margin ratio drops below 100%?

Liquidation is triggered when the maintenance margin ratio reaches 100%. The system executes a four-step process — including dynamic hedging and position reduction — until the account stabilizes above 110% or all positions are liquidated.

Q4: Are options treated differently than futures in portfolio margin?

Yes. Options are subject to additional risks like theta decay (MR2), vega shifts (MR3), and interest rate sensitivity (MR5). Their non-linear payoff profiles require more complex modeling than linear futures contracts.

Q5: Does portfolio margin support all cryptocurrencies?

Most major coins including BTC, ETH, SOL, BNB, XRP, ADA, LTC, and others are supported. Tier classifications determine stress test parameters and discount rates applied during USD conversion.

How to Test Portfolio Margin Before Going Live

You don’t need to activate portfolio margin mode to see how it affects your positions. Use the Position Builder tool — available via web and API — to simulate:

This lets you preview margin usage under various market shocks before committing capital.

Liquidation Process in Portfolio Margin Mode

When your maintenance margin ratio falls below critical thresholds, the system initiates a structured liquidation sequence:

Step 1: Dynamic Hedging for Stablecoin Risk (DDH1)

If MR9 dominates (e.g., USDT drops to $0.95), the system adjusts perpetual or expiry futures positions to hedge depegging exposure.

Step 2: General Dynamic Hedging (DDH2)

When spot shock (MR1) is the largest risk — such as a 15% BTC drop — options positions are used to reduce delta exposure.

Step 3: Basis Hedge Process

If basis risk (MR4) prevails — meaning futures prices diverge significantly from spot — the system liquidates expiry futures with different maturities simultaneously.

Step 4: General Position Reducing Process

Positions contributing most to risk are reduced tier by tier based on liquidity and impact until the portfolio regains safety (MMR ratio > 110%).

Each step is irreversible and executed only if prior steps fail to stabilize the account.

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👉 Start optimizing your trading strategy with intelligent margin allocation now.