SEC and CFTC ask: can we please stop double-counting your hedges? 🧮

The US Securities and Exchange Commission and the Commodity Futures Trading Commission opened a joint public consultation on aligning portfolio margin rules across securities and derivatives markets, asking for feedback on cross-margining, collateral treatment, risk management and customer protections. The agencies said the comment period will run for 60 days after the request is published in the Federal Register. "Cross-margining offers a clear opportunity to unlock liquidity that remains frozen in separate accounts," SEC Chair Paul Atkins said, adding that harmonizing the agencies' frameworks could help prevent jurisdictional overlap from limiting innovation and market efficiency.

Cross-margining lets firms offset positions across different products or markets when calculating margin requirements, rather than treating each position separately, so hedged portfolios can post less collateral based on overall portfolio risk. The SEC oversees securities and security-based swaps, while the CFTC regulates futures, swaps and commodity derivatives, a split that has drawn attention as crypto exchanges and brokerages increasingly operate across both markets.

The joint request follows a string of recent approvals expanding crypto derivatives offerings on US-regulated venues. On May 29, the CFTC approved Bitcoin ($BTC) perpetual futures for prediction market platform Kalshi and cleared Coinbase Financial Markets to offer eligible US institutional clients access to certain Deribit-listed crypto options and perpetual futures, with Coinbase beginning that access the same day through its integration with Deribit. A few weeks later, Kraken launched CFTC-regulated perpetual futures for eligible US users through its recently acquired Bitnomial platform, extending its domestic derivatives lineup beyond CME-listed crypto futures.

The expansion has surfaced broader questions about how existing frameworks apply across asset classes. Earlier this week, CFTC Chair Mike Selig said cryptocurrency perpetual futures were not a "natural fit" for traditional commodity markets such as agriculture, underscoring the challenges regulators face in applying legacy rules to newer products. The SEC and CFTC are now seeking public input on whether unified margin treatment could reduce fragmentation without weakening customer protections or market stability.