Enter the total margin ($) and the exposure margin ($) into the SPAN Margin Calculator. The calculator will evaluate and display the SPAN Margin. 

SPAN Margin Formula

The following formula is used to calculate the SPAN Margin. 

SPM = TM - EM
  • Where SPM is the SPAN Margin ($)
  • TM is the total margin ($) 
  • EM is the exposure margin ($) 

To calculate the span margin, subtract the exposure margin from the total margin.

How to Calculate SPAN Margin?

The following example problems outline how to calculate SPAN Margin.

Example Problem #1:

  1. First, determine the total margin ($).
    • The total margin ($) is given as: 167.
  2. Next, determine the exposure margin ($).
    • The exposure margin ($) is provided as: 40.
  3. Finally, calculate the SPAN Margin using the equation above: 

SPM = TM – EM

The values given above are inserted into the equation below and the solution is calculated:

SPM = 167 – 40 = 127.00 ($)

FAQ

What is the purpose of calculating SPAN Margin?
SPAN Margin is calculated to determine the required margin that a trader needs to hold in their brokerage account to cover potential losses on their positions. It is a risk management tool used by exchanges and clearinghouses to mitigate the risk of default by ensuring traders have enough capital to cover their trading positions.

How does exposure margin differ from total margin?
Exposure margin is a part of the total margin requirement. While the total margin includes both the initial margin and the exposure margin, the exposure margin specifically accounts for the potential loss in a trading position due to market movements. It acts as an additional cushion against market volatility, whereas the total margin is the sum of the initial margin (the minimum amount required to enter a trade) and the exposure margin.

Can SPAN Margin change over time?
Yes, SPAN Margin can change over time as it is dependent on market conditions and the volatility of the underlying asset. Exchanges and clearinghouses regularly update margin requirements based on their assessment of market risk. As a result, traders may need to adjust the funds in their margin accounts to meet the updated SPAN Margin requirements.