Nymex, ICE Raise Margin Requirements on Oil

Discussion in 'Commodity Futures' started by ChkitOut, Feb 24, 2011.

  1. FYI..

    The New York Mercantile Exchange boosted the margin requirement on its oil futures for the first time since March 2009 and the IntercontinentalExchange Inc. raised its rates for the second day in a row as crude traded above $100 a barrel.

    Margins for speculators on the Nymex will increase to $6,075 per contract from $5,063 after the close of trading tomorrow, according to a notice on the website of the CME Group, Nymex’s parent. For hedgers, the rate will rise to $4,500 from $3,750. The latest change on ICE will boost the Brent margin to $5,200 from $4,850. The cost has jumped 14 percent this week.

    “If you have the margin raised, that takes capital out of your position,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “You have to reduce your position to balance your margin account.”

    The last time Nymex changed its margin requirement was April 23, when it cut rates, according to Chris Grams, a CME spokesman.

    “We regularly review market volatility and make margin adjustments as necessary,” Grams said in an interview.

  2. bone

    bone ET Sponsor

    As of yesterday, the Nymex had a $10.00 daily price limit, and ICE had no daily price limit.

    So, the "reach for the stars" resting sell orders were placed GTC on the ICE exchange.
  3. ?.....that's your 10,000-lot at $150, or better? :confused: :eek: :D
  4. It's a 5-minute halt, not a hard limit and GLOBEX accepts day orders outside of it.

    You have to be careful with fishing expeditions on ICE, they have a reputation for busting trades - I don't recall if anything was busted when the drunk guy out of London ran Brent up five bucks in the overnight a few years back.

  5. Bet they screwed some folks real good.
  6. 1) No way, Hozay.
    2) Back in March-2009, 2 years ago, with crude oil near $45/barrel, a ~$5,000 initial margin was ~11% of the contract value. If anything, the margins have lagged the market, they've been too "small" for too long.
    3) To bump up margins to ~$6,000, ~6% of contract value, is better than ~11% or $11,000 per contract with crude oil @~$100/barrel. :cool:
  7. So yesterday we saw, margins raised on crude oil by the exchanges, a false rumor from CNBC that Gadaffie had been shot, the energy administration with a press release stating the lost oil from Libya not a big deal. That’s what you call a coordinated effort to cap oil prices. Why even have an exchange if they won’t let it trade freely.
  8. Forgot to add King of Saudi said it can make up for any supply loss.

    Let it rise it will spur opportunities in other forms of energy,, nope can’t do that.