Portfolio margin is a risk-based margin

Margin (finance)

In finance, a margin is collateral that the holder of a financial instrument has to deposit to cover some or all of the credit risk of their counterparty...

 policy. Portfolio margin usually results in significantly lower margin requirements on hedged positions than under traditional rules. While margin requirement of Regulation T

Regulation T

Federal Reserve Board Regulation T is 12 CFR §220 - Code of Federal Regulations, Title 12, Chapter II, Subchapter A, Part 220 ....

 generally limit leverage

Leverage (finance)

In finance, leverage is a general term for any technique to multiply gains and losses. Common ways to attain leverage are borrowing money, buying fixed assets and using derivatives. Important examples are:* A public corporation may leverage its equity by borrowing money...

 on equity to 4:1, with portfolio margin, accounts may increase their leverage up to 6:1 or more.

Portfolio margin calculates the total loss potential of the portfolio and not individual positions. NYSE Margin requirement are calculated using the Options Clearing Corporation

Options Clearing Corporation

Options Clearing Corporation or OCC, founded in 1973, is the world's largest equity derivatives clearing organization, providing central counterparty clearing and settlement services to 14 exchanges and platforms for options, financial and commodity futures, security futures and securities...

's (OCC) risk model to stress the positions with valuation changes at plus and minus intervals between 3% and 15%. They require 15 percent collateral requirement for equities and can be less for hedged options.

The NYSE began a pilot program in April 2007 offering portfolio margin to certain qualified accounts.