Luxor Derivatives Lowers Margin Requirements for Forwards

In a move to aid in market participants’ capital efficiency, Luxor’s Derivatives desk is lowering margin requirements for its forwards contracts. Luxor collects Initial Margin from market participants at the outset of trades in both USD- and BTC-denominated contracts.

Previously, Luxor’s Initial Margin schedule was an increasing, sliding scale with duration and time to the first day of settlement. This meant that a 30-day contract with settlement starting in 120 days required significantly more margin than a 30-day contract with settlement starting in 15 days.

Starting on April 8th, Luxor’s new Initial Margin schedule will be a flat 35% for USD-denominated contracts and a flat 18% for BTC-denominated contracts.

Examples

To walk through an example of the new Initial Margin requirements, let’s assume a trader purchases 100 PH of the June 2024 USD NDF for a price of $60 per PH/s/Day.

Notional: 100 PH x 30 days x $60 = $180,000

NEW Initial Margin: $180,000 notional x 35% Initial Margin = $63,000

PREVIOUS Initial Margin: $180,000 notional x 60.23% Initial Margin = $108,420

Walking through another example of the new Initial Margin requirements, let’s assume a trader sells 100 PH of the July 2024 BTC NDF at a price of .00080 BTC per PH/s/Day.

Notional: 100 PH x 31 days x .00080 BTC = 2.48 BTC

NEW Initial Margin: 2.48 BTC notional x 18% Initial Margin = .4464 BTC

PREVIOUS Initial Margin: 2.48 BTC notional x 34.42% Initial Margin = .8536 BTC

Here at Luxor’s Derivatives desk, we feel strongly that these improved Initial Margin requirements will allow us to continue to maintain an orderly and functional marketplace while helping market participants in their capital allocation, hedging operations, and hashrate trading.