Reuters reported that the CME Group raised trading margins on platinum and copper futures hoping to tame volatility in products that have fallen sharply as markets witness what is turning out to be the worst rout since the 2008 financial crisis.
The CME, the biggest operator of US futures exchanges increased its margin requirements on platinum futures by about 29% and on Comex copper futures, the second time in less than a fortnight by 15%.
The exchange's latest move followed a fall in prices of US platinum and copper futures to their lowest since July 2010 as a shaky global economy continued to gnaw at investor confidence.
But analysts said that the increased margins may do little to infuse stability in the products in the current environment where investors are worried the euro zone sovereign debt crisis could spread to the rest of the world.
Mr Natalie Robertson analyst at Australia and New Zealand Bank said that "Under normal circumstances it would be more effective, but given what's happening in Europe, it isn't being as effective as it normally would be in other conditions. The market's still very jittery concerning global growth issues."
CME raised initial margins on Comex copper futures by 15% to USD 7,763 a contract from USD 6,750 while raising the same requirement on NYMEX platinum futures to USD 4,950 a contract from USD 3,850. The increase of USD 1,013 per contract in copper margins multiplied by both sides of the open interest in the market suggests about USD 240 million more in margin escrow.
The total aggregate margin call on COMEX platinum futures contracts would be nearly USD 82 million based on calculations on the total open interest by the end of October 3rd 2011.
CME last raised margins on copper futures contracts on September 23rd 2011 by 17.6% and revised margins on platinum futures in May lowering maintenance margin requirements by 22.2%. The latest margin requirement hike on the futures contracts will take effect after the close of business on October 4th 2011.
Earlier the CME said that it will more than double the amount of physical gold it can accept from its clearing members as collateral to USD 500 million, to allow market participants to better manage their risk and to take advantage of lower gold lease rates.
(Sourced from Reuters)
