CME Increases Trading Margins Again Amid Silver's Volatile Ride

[PeacePlan]

CME Increases Trading Margins Amid Silver's Volatile Ride

• By Tatyana Shumsky
  Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Exchange operator CME Group Inc. (CME) raised margins for Comex silver futures for the second time this week as silver prices soar amid much volatility.

The higher margins take effect at the close of trading Friday, the exchange said. The CME revises its margin requirements as a normal course of business, and has previously raised bond requirements during times of high volatility to guard traders against additional risk. The operator owns New York Mercantile Exchange, which trades silver on its Comex division.

For speculators in the benchmark 5,000-ounce silver futures contract, the exchange is raising initial margin requirements, or the deposit required to purchase a contract, to $14,513 per contract, up from $12,825. Maintenance margin requirements, or the additional capital needed to keep the contract overnight, will increase to $10,750, from $9,500.

For hedgers and exchange members, both the initial and maintenance margin requirements will also increase to $10,750 from $9,500 per contract.

CME also raised margins for the Comex silver trade at settle contracts, which allow traders to lock in the day's settlement price for their purchases or sales.

Additionally, the exchange raised initial and maintenance margins for Comex Miny silver futures and the E-Mini silver futures contracts.

Thursday's increase follows a similar margin increase Monday, and comes during the astonishing volatility in silver prices. Silver posted another huge price swing Thursday, with the front-month contract rising 3.4% to a record settlement of $47.520 a troy ounce. Investors have been flocking to this relatively small market to take advantage of the metal's much lower price than that of gold, which is sky high.

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[pmbug]

The price of poker just went up!

 

[vita3]

they should raise it a lot higher than that.

 

[ILUVRP]

they should raise it a lot higher than that.

i agree 100% , 6% margin on is a little low , i would think 10-15% would make for a more stable thading market , even 25% would not hurt.

i also think if the margin on crude oil/gas futures was 80-90% you would see the price go down at least 30% , could go down even more , the world is in a ression , the saudia's and other opec nations are cutting production.

its all a game to the heavy hitters that trade thousands of contracts at a time , using 6% margin , raising the margin would hurt no one except the big spectulators and opec and the terrorist they support.

 

[Jordan]

i agree 100% , 6% margin on is a little low , i would think 10-15% would make for a more stable thading market , even 25% would not hurt.

i also think if the margin on crude oil/gas futures was 80-90% you would see the price go down at least 30% , could go down even more , the world is in a ression , the saudia's and other opec nations are cutting production.

its all a game to the heavy hitters that trade thousands of contracts at a time , using 6% margin , raising the margin would hurt no one except the big spectulators and opec and the terrorist they support.

In all reality, changing the margin requirements is intended to keep a level playing field between commodities by having a good volatility:margin requirement level. If margin runs too high on a particular commodity, it will give incentive to speculators to enter that particular market, since they can earn greater ROIs on their money.

If, for example, the whole of the NYSE said, "no more leverage" and the NASDAQ said "We'll let you do 10:1!," the bulk of short-term traders would go to the NASDAQ issues, in order to maximize the use of their available capital.

 

[ILUVRP]

the Commodities Futures Trading Commission regulates the futures trading, they can set all margin limits and how many contracts people can hold ( ask bunker hunt )commodities were org set up for farmers so the could sell their forward crops production , now there are commodity trading on about everything, with opec helping to control the price of crude with their setting production levels it is a rigged game, the only losers are the consumers.

rasing the margin on silver/gold is no big deal as far as the average american does , we don't eat it ,cool/ heat homes, burn it in our cars , has very little to do with inflation , its just a preception of a weak dollar, crude oil/gas effects us all , there is no reason at all for it to be over $50/b , it is just being controled , at the present time there is over 10,000 oil wells capped in the gulf.

 

[Godisnowhere]

"it is just a perception of a weak dollar" Now that is statement made in real ignorance or deception or perhaps both. We have a 100 Trillion USD liability with deficits exceeding a trillion a year, no way to pay it back and money printing gone wild (QE), a fed who says inflation is not happening, a fed who tells us no more QE but knows the required deficits and no debt buyers will cause more printing (QE), and China announcing it' intention of dumping 2 trillion of US Treasuries out of the 3 they own and we have people that make statements like this? What kind of fool actuallys believes a weak dollar is a perception and not a fact? Is this ignorance or deception?

 

[ILUVRP]

sorry for the bad choice of words , i meant to say indication of a weak dollar , everyone knows the dollar is a pos .

 

[JCLibertarian]

Isn't this essentially a price ceiling on silver? Won't this just create shortages?

 

[Jay Tea]

Isn't this essentially a price ceiling on silver? Won't this just create shortages?

This is something like the fourth time the CME has pulled this little trick this year. As you've probably noticed, it hasn't stopped silver's rise one little bit.

 

[Seraphim]

Not really - it just regulates the amount of leverage that futures traders can use in their contracts. It cools off the market for a short period, but they are spinning their own wheels trying to avoid/delay a default on the Comex. The fundementals have not changed one bit, the POS will continue to rise ovr the long term- a run on the Comex is what they are trying to avoid.

Isn't this essentially a price ceiling on silver? Won't this just create shortages?