Two of Wall Street’s top regulators are asking the public a big question: should portfolio margin rules work the same way across securities and derivatives markets?
The SEC and CFTC opened a joint consultation this week seeking feedback on cross-margining, collateral treatment, risk management, and customer protections. The comment period stays open for 60 days after publication in the Federal Register.
The core idea is straightforward. Right now, if you hold offsetting positions across different products, you often can’t count them together when calculating margin. Each position gets treated separately, which means more collateral sitting idle. Cross-margining would fix that by looking at the portfolio’s overall risk instead.
SEC Chair Paul Atkins put it plainly: cross-margining “offers a clear opportunity to unlock liquidity that remains frozen in separate accounts.” Harmonizing the two agencies’ rules could also prevent jurisdictional overlap from stifling innovation.
This matters more than ever for crypto. As crypto exchanges and brokerages increasingly operate across both securities and derivatives markets, the split between SEC oversight (securities and security-based swaps) and CFTC oversight (futures and commodity derivatives) creates friction.
The timing isn’t random. Recent CFTC approvals have opened the floodgates for crypto derivatives. Bitcoin perpetual futures got the green light for Kalshi. Coinbase is now routing institutional clients to Deribit-listed crypto options and perps. Kraken just launched CFTC-regulated perpetual futures through its Bitnomial platform.
CFTC Chair Mike Selig recently admitted that crypto perpetual futures aren’t a “natural fit” for traditional commodity markets. This consultation is essentially the regulators asking: how do we make the framework work when the products don’t fit the old boxes?
