September 17, 2025 — Derivatives traders are hoping to find relief from rising funding costs by taking a more active approach to collateral management and cross-margining offsetting positions.  
Derivatives market participants exchange margin and collateral to mitigate counterparty risk. As funding costs increase, so does the cost of deploying this capital. Fortunately for derivatives desks, central counterparties (CCPs) have recognized the strain these elevated costs place on their clients and have made strides to enhance cross-margining capabilities as a way of minimizing collateral costs.

Ninety-four percent of derivatives professionals participating in a recent Crisil Coalition Greenwich study believe there are margin savings that can be realized between their USD swaps and USD futures by cross-margining offsetting positions. 

“Bringing as many of the products that require margin into the cross-margining equation will both help market participants manage costs and potentially reduce their margin requirements overall,” says Stephen Bruel, Senior Analyst in Market Structure & Technology at Crisil Coalition Greenwich and author of Fixed-income cross-margin opportunities: A driver of change.

Price Differentials Among CCPs
Another factor playing a role in determining costs for derivatives desks is the CCP basis, or the price differential between identical swaps contracts cleared at different CCPs. The CCP basis, in turn, can be impacted by differing collateral costs, positioning and netting opportunities between the CCPs. Historically, the CCP basis fluctuated with market volatility. In recent months, however, the CCP basis between CME Group and LCH has been stable, despite the significant volatility.

“This new dynamic of the CCP basis may change how market participants determine where to clear,” says Stephen Bruel. “Our research confirms that derivatives market participants are willing to clear swaps and futures at a particular CCP if margin savings exceed the costs of hedging the basis.”

Fixed-income cross-margin opportunities: A driver of change presents the results of a 1H 2025 study based on interviews with senior derivatives market participants in the United States, including clearing brokers, executing brokers and the buy side, about key trends in margin and collateral. The report analyzes the key factors impacting the cost of trading interest-rate futures and swaps, and strategies derivatives desks are using to mitigate collateral costs.