Did CME just cut margin rates on gold and silver?

CaptHenway · October 9, 2014 9:18AM

Over on the dealer-to-dealer network one dealer said that late today margins were cut by 10-15%. Can anybody confirm or deny that?

MGLICKER · October 9, 2014 9:22AM

Confirmed.

Text

piecesofme · October 9, 2014 9:53AM

not lowered enough to have an impact like the way it does when they raise it by this same percentage change.

piecesofme · October 10, 2014 6:05AM

Absolutely meant nothing because it needs to be cut significantly more to have an impact.

CaptHenway · October 10, 2014 12:47PM

Thank you!

derryb · October 10, 2014 3:52PM

normal considering spot price movement

cohodk · October 11, 2014 12:06AM

<< normal considering spot price movement >>

Exactly. Lower price requires less capital to maintain a position, just as a higher price requires more capital.

No conspiracy or manipulation.

derryb · October 11, 2014 12:53AM

<< 

<< normal considering spot price movement >>

Exactly. Lower price requires less capital to maintain a position, just as a higher price requires more capital.

No conspiracy or manipulation. >>

And less capital enables more unfunded positions. Sorta like manipulation.

cohodk · October 11, 2014 2:24AM

All positions are funded.

derryb · October 11, 2014 4:26AM

my bad. more "minimumly" funded positions. Lower margins mean more positions for the same up front money.

Wingsrule · October 12, 2014 3:35AM

Over the last few years, there has been no correlation between the direction of the margin change and the direction of the price of silver over the following week.

MGLICKER · October 17, 2014 2:21AM

<< Over the last few years, there has been no correlation between the direction of the margin change and the direction of the price of silver over the following week. >>

Logical to adjust margins to clearinghouse risk. Reckless to use it to tamp down fast markets.

coinrollhunter · October 17, 2014 2:22AM

Mglicker, should crypto be banned as well for saying the exact same thing I said? Or should I be banned because you don't like me? Have you lectured crypto?

jmski52 · October 17, 2014 2:28AM

Logical to adjust margins to clearinghouse risk. Reckless to use it to tamp down fast markets.

It depends. If you consider that these are leveraged positions, I do agree that it makes sense to stimulate trading when the market is slow and to slow things down when the market gets heated up.

MGLICKER · October 17, 2014 2:37AM

<< Logical to adjust margins to clearinghouse risk. Reckless to use it to tamp down fast markets.

It depends. If you consider that these are leveraged positions, I do agree that it makes sense to stimulate trading when the market is slow and to slow things down when the market gets heated up. >>

Disagree. Margin hikes should be used only to minimize risk of default in a potentially fast market. Conversely, lowered in a perceived less volatile environment. To attempt to alter trading patterns is open to abuse.

cohodk · October 17, 2014 11:12AM

<< Logical to adjust margins to clearinghouse risk. Reckless to use it to tamp down fast markets.

It depends. If you consider that these are leveraged positions, I do agree that it makes sense to stimulate trading when the market is slow and to slow things down when the market gets heated up. >>

There is no stimulation. It simply costs less to buy 5000 oz silver today than a month ago therefore less capital is required to initiate and maintain a position.

jmski52 · October 17, 2014 1:11PM

There is no stimulation. It simply costs less to buy 5000 oz silver today than a month ago therefore less capital is required to initiate and maintain a position.

Okay then. Facilitation.

Did CME just cut margin rates on gold and silver?

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