CME changes margin req to INITIAL = MAINTENANCE !?!?!?

Discussion in 'Trading' started by DisciplinedHedg, Nov 4, 2011.

  1. thanks for info.:)
    #31     Nov 5, 2011
  2. ubgr


    #32     Nov 5, 2011
  3. Probably a good idea for most traders.

    No need to leverage something that is already leveraged.

    Baby steps folks.
    #33     Nov 5, 2011
  4. So that alarmist rag ZH breaks this story, all the comments insinuate this is some contrived margin call to squeeze long metals positions.

    Now they flip-flop and imply the change will cause a gross expansion of risk as if speculators will suddenly open positions Monday with the windfall expansion of leverage the disparity between initial/maint offers them.

    In their infinite stupidity ZH fails to mention with the exception of a few products "evil" exchange members never have to post initial margin to begin with (only maintenance). So IMO this is just a protection being offered to retail accounts facing liquidation through no fault of their own because of MF transfers.

    I can't believe anyone reads this shit. This is a nonevent and just a small temporary added protection for the little guy, kudos to CME.
    #34     Nov 5, 2011
  5. ZH frequently and often, not to mention regularly, over the top.

    #35     Nov 5, 2011
  6. ddouglas


    Agreed - the last thing I would expect CME to do is to disrupt orderly markets. That is the opposite of what they want.

    This is a temporary accommodation, so that firms which require 100% of Initial margin for overnite positions are not forced to liquidate their newly-acquired MF clients' positions immediately upon receiving the account.

    Many firms require 100% of Initial margin to carry an overnite position (mine does), but apparently MF did not - creating a problem for the transfer process.

    Keep in mind that most risk-management systems would not trim a position until it was back within margin guidelines - it would just liquidate the entire position immediately. So rather than trying to re-write everyone's risk-management software over the weekend, it's just easier to lower margins to avoid mass auto-liquidation.
    #36     Nov 5, 2011