06.25.2020

Mirae Asset Securities USA Offers Hedge Fund Portfolio Margining

06.25.2020
Mirae Asset Securities USA Offers Hedge Fund Portfolio Margining

The buy side can now better manage portfolio risk, while gaining access to greater leverage.

How?

Mirae Asset Securities (USA) Inc. (“Mirae”) is now offering its new Portfolio Margin Product (“PM”) to qualified, sophisticated traders with hedged portfolios to help them benefit from lower capital requirements and greater leverage. It will also assist such clients helping to limit investment losses when using portfolio margin platforms.

Jay Patel

According to Jay Patel, Executive Director of Credit & Risk Management at Mirae, PM is a risk-based methodology used to compute risk on eligible stock and option margin requirements for institutional accounts. PM requirements are based on theoretical loss on a broader portfolio — instead of on fixed percentages for individual positions, as required by traditional Regulation T margin requirements (“Reg T”).

Reg T is a set of provisions governing investors’ cash accounts and the amount of credit that brokerage firms and dealers may lend to customers for the purchase additional securities. Reg T also governs how an investor buys on margin by using funds borrowed from a broker using other securities as collateral.  Specifically, for a margin purchase, Reg T permits margin investors to borrow no more than 50% of the price of shares. This is intended to limit market volatility in addition to possible investor losses.

Robert Akeson, Mirae Asset Securities USA

PM also allows an investor to have improved transparency and alignment between applicable margin requirements and overall risk within the portfolio. This will often result in lower margin requirements than the standard requirements imposed upon a Reg T margin account.

“For those hedge fund customers who seek greater than Reg T leverage, this is a tool that can help them generate additional alpha while enabling them to better manage their risk,” said Robert Akeson, Co-Head of Prime Brokerage at Mirae Asset Securities. He added that, “we are excited to offer this additional capability to hedge funds and are working on other ways to extend the benefits of the Mirae franchise to them, such as accessing Korean sources of investment capital.”

Mirae, the North American division of Korea-based Mirae Asset Financial Group, offers a wide range of offerings to the buy side, including prime brokerage, securities lending, repo, agency execution, outsourced trading and correspondent clearing. The Mirae family of companies currently operates in 14 country markets, including South Korea, United States, Australia, Brazil, Canada, China, Colombia, Hong Kong, India, Indonesia, Mongolia, Singapore, the U.K. and Vietnam.

Related articles

  1. Dalio founded the hedge fund 47 years ago.

  2. A Web of Interdependencies

    Virtual forum enables senior execs to gauge sentiment and benchmark approaches to common challenges.

  3. Deutsche Borse-LSE Merger in Focus

    SkyBridge will use some proceeds to buy $40m in cryptocurrency to hold on its corporate balance sheet.

  4. Assets in global ETFs were $5 trillion larger than assets invested in global hedge funds at the end of Q2.

  5. MiFID II to Boost Automation

    More everyday tasks can be automated, alternative investment management industry report says.