Cme margins raised after hours

[chad]

I cant link to it as I'm on my phone, but there's a story over on zerohedge that the cme raised margin requirements to even for everything after hours tonight. Supposed to affect margin calls opening on Monday morning. Well, that sucks.

[osoab]

Here's the advisory. It is the most simple text wise advisory I have seen. It is weird.

http://www.cmegroup.com/tools-information/lookups/advisories/clearing/files/Chadv11-396.pdf

Here's the Zerohedge story

CME Goes To Margin DefCon 1: Makes Maintenance Margin Equal To Initial For... Everything!? (http://www.zerohedge.com/news/cme-goes-margin-defcon-1-makes-maintenance-margin-equal-initial-everything)



The most important news announcement of the day was not anything to came out of Cannes (as nothing did), nor from Greece (the merry go round farce there continues unabated). No, it was a brief paragraph distributed by the CME long after everyone had gone home, and was already on their 3rd drink. It is critical, because not only is this announcement a direct consequence of what happened with MF Global several days ago, but because also it confirms one of our biggest concerns: systemic liquidity is non-existanet. We confirmed interbank liquidity in Europe was at an all time low earlier (http://www.zerohedge.com/news/behind-scenes-european-panic-interbank-liquidity-worst-level-ever)today, and can only assume the same is true for US banks. But what is very disturbing is that this is just as true at the exchange level, where it appears the aftermath of the MF collapse is just now being felt. What exactly was the announcement. Unless we are completely reading it incorrectly, it is nothing short of a margin call for tens if not hundreds of billions worth of product. Because as of close of business on November 4, today, the CME just made the maintenance margin, traditionally about 26% lower than the initial margin for specs, equal. For everything. Which means that by close of business Monday, millions of options and futures holders will be forced to deposit billions in additional capital to the CME just so they are not found to be margin deficient, and thus receive a margin call. Naturally, since it is very unlikely that this incremental amount of liquidity can be easily procured in one business day, we anticipate the issuance of hundreds of thousands of margin calls Monday, followed by forced liquidations of margin accounts across America... and the world. Just like when Lehman blew up, it took 5 days for Money Markets to break. Is this unprecedented elimination in the distinction between initial and maintenance margin the post-MF equivalent of the first domino to fall this time around?

[chad]

So, what do you think, $1400 gold and $15 silver by tuesday morning? :)

[osoab]

The 26% is dead on for Au and Ag.

The list of hikes is in this thread if anyone want to thumb through the current numbers for the initial and maintenance. I'll add this hike shortly.
http://gold-silver.us/forum/showthread.php?42773-Comex-Nymex-Hike-Margins-On-Gold-Silver&p=457235&highlight=raises+margins#post457235



This could be a blood bath. Sell everything on Monday? It is going to get ugly imho.

[Shami-Amourae]

http://www.youtube.com/watch?v=Flv5KMXjEPs

[ximmy]

Does this mean prices could fall during the week... because I have the dollars for purchasing... :p if there is any to be found... :-\

[Twisted Titan]

This is the same group that hikes upo on silver and Gold right??

How long before we are at 100 %

[osoab]

Does this mean prices could fall during the week... because I have the dollars for purchasing... :p if there is any to be found... :-\


You may have to wait a week or two to avoid 10 dollar premiums on Ag.

A couple of comments on ZH were saying they were getting out of the blue emails from Gainsville pimping SAE's at 2.50 over spot.

Anyone else get any promo offers out of the blue this week from coin shops?

[osoab]

Here is a good read. I am guessing this new margin chain will have huge impact on former MF clients. This is like a compounding event for them.

Ex-MF Global Customers Fear Margin Calls After Account Transfers (http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201111041549dowjonesdjonline000 549&title=ex-mf-global-customers-fear-margin-calls-after-account-transfers)





By Jerry A. DiColo and Dan Strumpf, Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones (http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201111041549dowjonesdjonline000 549&title=ex-mf-global-customers-fear-margin-calls-after-account-transfers#))- Some former customers of MF (http://www.nasdaq.com/symbol/mf) Global Inc. (MFGLQ (http://www.nasdaq.com/symbol/mfglq)) scrambled Friday to sort through newly unfrozen funds--and awaited word on whether they will have to put up additional capital to back their market bets.

On Friday, CME (http://www.nasdaq.com/symbol/cme) Group Inc. (CME (http://www.nasdaq.com/symbol/cme)) transferred more than $410 million in 5,300 accounts from MF (http://www.nasdaq.com/symbol/mf) Global's U.S. brokerage, roughly 10% of the 50,000 accounts to be moved, to new clearing firms. A group of 10 clearing firms received the bulk transfers throughout the day Friday and have begun contacting clients about the new accounts.

For many of those new clients, the process was a nerve-wracking experience. Some said they were still unsure of when they would gain access to an account, which is required to resume trading (http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201111041549dowjonesdjonline000 549&title=ex-mf-global-customers-fear-margin-calls-after-account-transfers#). Others that regained control rushed to sell some positions in order to meet what they expect will be margin calls due to bets that have turned against them over the past week.

For all open bets in the commodities markets, traders need to put up cash to back the position, know as posting margin. In order to keep holding those bets if the contract falls in value, traders are required to post additional cash with their clearing firm.

But given the confusion over which accounts were moved and what margin the new clearing firm might demand, most believe the situation will be settled sometime over the next few days.

Anthony Beryl was one of the traders rushing to add additional funds to back market bets Friday. The president of Beryl Investment Group (http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201111041549dowjonesdjonline000 549&title=ex-mf-global-customers-fear-margin-calls-after-account-transfers#) in Palm Beach Gardens, Fla., said just under half of his 45 frozen MF (http://www.nasdaq.com/symbol/mf) Global accounts have been transferred to a new clearing firm, ADM (http://www.nasdaq.com/symbol/adm) Investor Services, a unit of Archer Daniels Midland Inc. (ADM (http://www.nasdaq.com/symbol/adm)).

Normally, he said he ensures that there is enough of a cash cushion in each account to cover margin requirements on all trades. But when the first batch of his accounts began moving, he said he found out that only a "very minimum margin" went with them.

Beryl, who has about $7 million under management, suffered because of the small amount of margin being transferred and being locked out from trading since MF (http://www.nasdaq.com/symbol/mf) Global declared bankruptcy Monday. Beryl liquidated certain profitable positions to raise cash against possible fluctuations in the future.

"I've had to liquidate positions that I normally would have kept intact," he said. "I would not have liquidated them otherwise if enough margins had shifted over with their original positions."

He said he is liquidating the positions to avoid what he views as a worse scenario: Having to approach his investors and ask them for additional cash.
One issue facing clearing firms and their new clients is that the trustee overseeing the transfer of the accounts hasn't released enough of the funds to back all open positions moved from MF (http://www.nasdaq.com/symbol/mf) Global. The percentage of the margin backing those positions has varied from one account (http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201111041549dowjonesdjonline000 549&title=ex-mf-global-customers-fear-margin-calls-after-account-transfers#) to another, former customers said. As such, some clients may need to post additional funds simply to start trading with a new firm.

A spokesman for the trustee overseeing the transfer of the accounts said some of the customers' cash is being held back because of a possible shortfall in MF (http://www.nasdaq.com/symbol/mf) Global's accounts.

Officials at the CME (http://www.nasdaq.com/symbol/cme) and the Commodity Futures Trading Commission estimated that $600 million in customer money is missing from the failed brokerage.
Marc Nagel, chief operating officer of Dorman Trading LLC, one of the firms receiving client accounts, said the funds he began receiving early Friday morning were "only a fraction" of the required collateral needed to back up the open positions.

"We're going to do a fine analysis to find out who's under and who's over," Nagel said.

To maintain any open positions, Nagel said new clients will have to bring their accounts up to the firm's standards for posting collateral backing those trades.
"As far as we were concerned, they were new customers. We know you have to get back to work. Fill out our paperwork, and give us some money," Nagel said.
Sean McGillivray, a vice president at Great Pacific Wealth Management, was embroiled in a similar process with his $5.5 million in MF (http://www.nasdaq.com/symbol/mf) Global accounts.

His clients' positions were sent to R.J. O'Brien and were received by the clearing firm midday Friday.

"Last night it sounded like we were going to get liquidated today, but now it sounds like we have some time," he said. After talking with R.J. O'Brien, he learned that the clearing firm would be sorting through the bulk transfer over the weekend and he would likely learn more Monday.

"From what we're being told, we're not going to be able to offset positions for at least a day," McGillivray said.

Beryl said he is confident that all of the account holders with MF (http://www.nasdaq.com/symbol/mf) Global will be made whole eventually. For now, he said he feels the situation has been handled poorly, and he remains in the dark about when the remainder of his cash with MF (http://www.nasdaq.com/symbol/mf) Global will be transferred.

"The trustee, the judge ,I don't think they're really getting their arms around this whole situation," he said. "It's continually changing and no one really knows what the real story is."

--By Jerry A. DiColo and Dan Strumpf, Dow Jones Newswires; 212-416-2155, jerry.dicolo@dowjones.com
--Leslie Josephs contributed to this article.

[gunDriller]

Does this mean prices could fall during the week... because I have the dollars for purchasing... :p if there is any to be found... :-\

can i borrow $10,000 in US$ ? ;) ;) ;)


i think this is a huge deal.

since we were all watching, we know that these margin calls tend to produce major downticks.

but, SYSTEM-WIDE ?

it's like the CME - i.e. the US government - is trying to cause a crash ... or to pump up the US $.


http://www.google.com/imgres?um=1&hl=en&client=firefox-a&sa=N&rls=org.mozilla:en-US:official&tbm=isch&tbnid=Gzn10ASlKJHD3M:&imgrefurl=http://www.diabetesmine.com/2011/06/ask-dmine-diabetes-friendly-popcorn-bg-targets-for-type-1s.html&docid=PtatSND6gO_CiM&imgurl=http://www.diabetesmine.com/wp-content/uploads/2011/05/popcorn.jpg&w=300&h=360&ei=4Dm1Ts6wKubaiQLmzZhl&zoom=1&biw=1178&bih=563

[osoab]

Read a comment on ZH that said this was going to be for all new contracts not existing contracts.

Anyone know how to verify this?

[Neuro]

I am thinking that maybe they are trying a massive smackdown because something so negative to FIAT is about to happen...

[Barbaro]

Read a comment on ZH that said this was going to be for all new contracts not existing contracts.

Anyone know how to verify this?

This is an important thing to note.

Article sounds like there is not grandfathering.

[chad]

The more and more I read about this, it appears to me as if it's a coordinated effort to nuke the 50,000 account holders over at mf global. Very few of them will be aware/have the cash needed to fund the new requirements, and all of those 'problem people' will go poof on Monday.

[Large Sarge]

this has to be th prelude to

1. war with Iran

2. monster QE3

3. or?

100% margin means the whole contract is due, if I am not mistaken, so it will be entirely physical delivery i.e. 100% margin on 5,000 oz contract of silver, is the entire net wrth of 5,000 ounces of silver. ($150,000.00++)

therefore anyone in the market, could just easily take delivery.

panic move

[LuckyStrike]

If they go to 100% margin it will kill the markets in the very short term, but after that. Shit goes parabolic.

[Shami-Amourae]

jsnip4 says he's selling a huge portion of his silver over the weekend:

http://www.youtube.com/watch?v=k4ufQhm-Rk4

Personally I'm not selling. I can't stomach selling my silver now. I do expect to buy as much as I can on Monday-Wednesday or whatever.

[Neuro]

LS I don't think that they require 100% margin just yet, as I understand it they are going to up the margin on maintenance contracts, to the same as new contracts.

Anyway I freaked out a bit, so I went to sell 150 g of gold an hour ago, but my intended shop had stopped dealing in gold, and here in Turkey the shearing of the sheep holiday begins tomorrow and I will not be able to sell anything until Thursday. The end result is that I will not be able to make a profit on this storm, that is OK though, I will just ride it out! Long term the Fiat system is irrepairably broken, and one shouldn't be too concerned about the little hickups and burps the market players causes...

[SWRichmond]

The greater the threat to the hegemony of the USD, the more iron-fisted the response will be. This is an iron-fisted response. Commodities will fall and the USD will appear to rise. Market panic will ensue. That will make it OK, and more "desirable," for Bernanke to print in order to bail out europe.

Problem / Reaction / Solution

[VX1]

OK, now there's speculation that what the CME did, was to actually lower the initial margin (rather than raise the maint.)... possibly to help the MF Global debacle:

http://kiddynamitesworld.com/the-cme-margin-notice-that-has-everyone-in-a-tizzy

[Horn]

I am thinking that maybe they are trying a massive smackdown because something so negative to FIAT is about to happen...

With end net effect of combining Euro & Dollar markets, they'll be able to support the "F UK US PIIGS" for the next quarter or two.


and here in Turkey the shearing of the sheep holiday begins tomorrow

to fitting...

[Shami-Amourae]

http://gold-silver.us/forum/attachment.php?attachmentid=1489&d=1320516524
http://www.cmegroup.com/tools-information/lookups/advisories/clearing/files/Chadv11-400.pdf

[Twisted Titan]

Looks like ZH screwed the pooch on this one and jumped the gun

[Neuro]

Fuck I am lucky I didn't manage to sell gold as I had planned!

[VX1]

Looks like ZH screwed the pooch on this one and jumped the gun


Sure, but I hardly blame them, given the timing and almost purposeful ambivalence of Friday’s CME message.

[Neuro]

A thing I thought is that considering the reaction this got on market players, maybe CME decided just to do some market research, to see what would be a useful gun to begin with. Considering the reactions this got, they now know a really usefull gun, whenever they decide to drop the market 10-20% in one go. And they will use it!

[beefsteak]

CME Issues Clarification On Margins: To Usher More Risk, Less Liquidity In MF Aftermath (http://www.zerohedge.com/news/cme-issues-clarification-margins-usher-more-risk-less-liquidity-mf-aftermath)

Submitted by Tyler Durden (http://www.zerohedge.com/users/tyler-durden) on 11/05/2011 - 14:37 MF Global (http://www.zerohedge.com/category/tags/mf-global) Moral Hazard (http://www.zerohedge.com/category/tags/moral-hazard) Yesterday, in what is the worst-phrased and most misleading press release to ever come out of the CME, the exchange issued a notice that going forward all Initial margin would be equal to Maintenance margin (http://www.zerohedge.com/news/cme-goes-margin-defcon-1-makes-maintenance-margin-equal-initial-everything). Our gut interpretation was that "Unless we are completely reading it incorrectly, it is nothing short of a margin call for tens if not hundreds of billions worth of product." Judging by the broad response, our initial reaction is what a prudent, logical human being would assume: after all, it is precisely the undercollateralization of customer accounts, and general underfunding at MF Global that is what brought that particular company down. Well, we wrong wrong. The CME, it appears has taken a page right out of the European playbook, and less than a week after an exchange-cum-Primary Dealer collapsed due to excessive risk taking, the CME has followed up its vague press release from yesterday by inviting even more risk in lowering the initial margin. Why is this a cause for even greater concern? As the CME itself says, "Initial margins are set to provide an additional buffer against future losses in the account" - so going forward that buffer has been reduced by about 30%. But what is the reasoning provided by CME: "The intent and effect of these changes is to decrease the size of any margin calls resulting from the bulk transfer of MF Global customers to new clearing members, not to increase them." So basically the CME is implicitly putting all of its existing and current clients and customers at further risk by onboarding the accounts of those clients who, like lemmings, held on to their MF Global accounts until after it was too late. Because while the lower Initial margin may apply to MF accounts, it will also apply to any Tom, Dick and Harry beginning Monday, who will suddenly see a 30% reduced gating threshold to put on a position. Any position, no matter how risky.

[Twisted Titan]

This is too fricken confusing for me.......Thank God I owe physical


All I have to do is just keep stacking and wait till the music finally stops.

[Neuro]

This is too fricken confusing for me.......Thank God I owe physical


All I have to do is just keep stacking and wait till the music finally stops.
Yes! That is what I should do as well instead of trying to trade this Babylonian Whore. I was just lucky that the gold and currency shop close to me stopped trading in gold. Imagine having sold the gold for the shearing of the sheep holiday. So far I have been bloody lucky with my trades. But this could have been a turning point...

[Twisted Titan]

Luck only takes you so far......

The House eventually wins if you keep going back to the crap table.

Just relax and take a nice comfy seat in the silver chair you've been preparing for a good while now.

[osoab]

Get Liquid. I do have to ask. Was MF's margins that much lower than the CME or other clearing houses?

ICE Follows In CME Footsteps, Lowers All Initial Margin (http://www.zerohedge.com/news/ice-follows-cme-footsteps-lowers-all-initial-margins)


And so another exchange decides to follow in the CME's (clarified) footsteps, and lowers Initial Margins for all in order to facilitate the onboarding of just clients with orphan MF exposure. Probably more important is that the ICE demonstrates how this can be done in a way that does not generate speculation and confusion, and avoids follow up clarifications, due to the counterintuitive nature of increasing initial leverage in the aftermath of an exchange filing bankruptcy due to excess leverage. And as usual, the real question is what would happen in the counterfactual? Would the market really tumble and would liquidations truly be pervasive on Monday is the contract transfer price is not lowered? Is liquidity in the market (and hence leverage) really that low (high)?

[chad]

I saw that ice thing a little bit ago. Why do this on a Friday night& Saturday afternoon? It's weird and doesn't 't fee l right. It also seems totally thrown together & uncoordinated, which you'd think the opposite would be true if they were trying to assuage fears. I don't know, it just is weird.

[k-os]

I saw that ice thing a little bit ago. Why do this on a Friday night& Saturday afternoon? It's weird and doesn't 't fee l right. It also seems totally thrown together & uncoordinated, which you'd think the opposite would be true if they were trying to assuage fears. I don't know, it just is weird.

I agree, but isn't everything lately?

Maybe they heard shortly after from some higher-ups that it was unfavorable (?)

[osoab]

I saw that ice thing a little bit ago. Why do this on a Friday night& Saturday afternoon? It's weird and doesn't 't fee l right. It also seems totally thrown together & uncoordinated, which you'd think the opposite would be true if they were trying to assuage fears. I don't know, it just is weird.


I'm thinking a lot of people were caught with their pants down when MF went under.

I think it was about a 1/3 of the CME trading floor was cleared off with MF's downfall.

[beefsteak]

....I do have to ask. Was MF's margins that much lower than the CME or other clearing houses?

Osoab,
The margins are set by the exchanges, NOT the clearing houses of which MF Global WAS one of the tiny handful, now there basically 2 clearing houses. No flexibility at all!

What is trying to be avoided is knee-jerk reaction to margin calls ON MF GLOBAL former customers who have been FROZEN OUT OF:
SPREADNG UP,
CLOSING OPEN POSITIONS
EXERCISING OPTIONS
SETTLING OPTIONS WHICH ARE IN THE MONEY and they have called,
and PAYING UP ON MARGINS CALLS
....just to name a few cash-flow triggers incumbent on the "trade all the time anytime" set, including HFTs (High Frequency Traders), a.k.a. the Algorithm/BlackBoxBunch.

MF Global had ZIP authority to collect on their own overnight MF customer margin calls issued on the day before declaring bankruptcy earlier in the week.

This is a blackswan event -- for those hung in their positions and sweating bullets since bankruptcy declaration. Usually a private sale is negotiated--a "shotgun wedding" for this level of default clearing houses-- but NOT in this instance.

Why?

One can clearly lay THAT at the feet of "assigned absorbers' firms" and their highly excitable unwillingness of the OTHER over-leveraged clearing houses to take on more risk when they also are teetering but don't want to admit just exactly what bad paper they are counterparties to already!

Ain't hypothecation funnnnnnnnnnn?

Truth be told, the clearing houses are still trying to match trades from over two years ago when Lehman went under...It's one of the dirty little secrets inside the CME.

Most people don't know that, so the lucky 12 or so brokerages who got "assigned MF Global customers" haven't a clue what kind of arbitrage they are going to have to perform on Monday AM to keep MF customer "absorb-ees" from swamping their paper boats.

This COULD get out of hand and get the markets shut down if chaos atop chaos reigns next week. Would be a GOOD time to stay out of the markets, PERIOD, and a great time for physical strategies only.

This is NOT a blackswan event--but has that potential, for the rest of us in the trading pits.


Former broker beefsteak here.

[gunDriller]

If they go to 100% margin it will kill the markets in the very short term, but after that. Shit goes parabolic.

it sounds like you're talking about Precious Metals.

it reminds me of the physics of an explosion. There is a moment of compression & contraction before things move, well, explosively.


as far as preparation for Iran, i wonder if the acceleration of troop withdrawal from Iraq is related to Iran. American troops in Iraq are vulnerable to Iran. if Iran is getting bombed to sh!t by the US, they don't have much to lose by taking their best shot at US troops in Iraq, right across the long Iraq-Iran border that is occupied mainly by Kurds.


http://www.cmegroup.com/

the CME group is a private company (i think, semi-regulated by the US gov.) that makes it's money as a 'trading floor' for virtually every market but the stock market.

i would bet you that they have buddies who have been trading on every single CME margin increase of the last few years. those 15 times we've seen them raise margin requirements in gold & silver ? i would think they let their friends know about it.

since this is the situation where it pays to have an extra $10K laying around, i'm guessing that the CME buddies Insider Trading Group has been busy raising cash so they can make another 15% on their money in the space of 2 weeks.

i think the price action this time will be more dramatic than with previous CME margin increases. seems like prices would fall 5 to 10 % with those previous margin increases, obviously creating a dramatic effect when they did it 5 times in a 2 week period back in April 2011 was silver was getting up to just shy of $50.

[beefsteak]

Just as I suspected:

November 5, 2011, at 7:42 pm
by David Duval (http://www.jsmineset.com/author/davidduval/) in the category


By CME Group
Published: Saturday, Nov. 5, 2011 – 11:04 am

CHICAGO, Nov. 5, 2011 — /PRNewswire/ — CME Group today is clarifying its notice to clearing firms regarding margins. In light of the issues customers transferring out of MF Global are facing, while still maintaining appropriate risk management protections for the market, CME Clearing is setting the “initial” margin upcharge to zero.

This upcharge is normally applied to customer accounts when they are receiving a margin call.

The intention and effect of these changes are to decrease the size of any margin calls resulting from the bulk transfer of MF Global customers to new clearing members not to increase them.

This is a short term accommodation to maintain market integrity and provide temporary relief to [MF Global] customers whose accounts have been disrupted by this event.

We apologize for any confusion our initial advisory may have created.
===================================


....I do have to ask. Was MF's margins that much lower than the CME or other clearing houses?



Osoab,
The margins are set by the exchanges, NOT the clearing houses of which MF Global WAS one of the tiny handful, now there basically 2 clearing houses. No flexibility at all!

What is trying to be avoided is knee-jerk reaction to margin calls ON MF GLOBAL former customers who have been FROZEN OUT OF:
SPREADNG UP,
CLOSING OPEN POSITIONS
EXERCISING OPTIONS
SETTLING OPTIONS WHICH ARE IN THE MONEY and they have called,
----->>>and PAYING UP ON MARGINS CALLS
....just to name a few cash-flow triggers incumbent on the "trade all the time anytime" set, including HFTs (High Frequency Traders), a.k.a. the Algorithm/BlackBoxBunch.

------->MF Global had ZIP authority to collect on their own overnight MF customer margin calls issued on the day before declaring bankruptcy earlier in the week.

This is a blackswan event -- for those hung in their positions and sweating bullets since bankruptcy declaration. Usually a private sale is negotiated--a "shotgun wedding" for this level of default clearing houses-- but NOT in this instance.

Why?

One can clearly lay THAT at the feet of "assigned absorbers' firms" and their highly excitable unwillingness of the OTHER over-leveraged clearing houses to take on more risk when they also are teetering but don't want to admit just exactly what bad paper they are counterparties to already!

Ain't hypothecation funnnnnnnnnnn?

Truth be told, the clearing houses are still trying to match trades from over two years ago when Lehman went under...It's one of the dirty little secrets inside the CME.

Most people don't know that, so the lucky 12 or so brokerages who got "assigned MF Global customers" haven't a clue what kind of arbitrage they are going to have to perform on Monday AM to keep MF customer "absorb-ees" from swamping their paper boats.

This COULD get out of hand and get the markets shut down if chaos atop chaos reigns next week. Would be a GOOD time to stay out of the markets, PERIOD, and a great time for physical strategies only.

This is NOT a blackswan event--but has that potential, for the rest of us in the trading pits.


Former broker beefsteak here.

[osoab]

Hey beefsteak. What do you make of this. Post I found over at ZeroHedge.

If this guys numbers are correct, what is the reasoning for paying more to go with MF than paying a lower margin rate with another firm?

http://www.zerohedge.com/news/ice-follows-cme-footsteps-lowers-all-initial-margins#comment-1849567



I'll post/paste this again. I believe you have to consider the Initial Margin that MF charged, the amount the client accounts have now. Considering that a Lowering makes sense.

Scoop for a journalist! MF Global Inflated Margins Posted by Ann Barnhardt - October 31, AD 2011 7:05 PM MST Um, Journalists? ZeroHedge people? Mr. Denninger? Market-Ticker forum people? You might want to pick this up and triple check me on this.

Okay, the NY Times and Reuters are reporting the MF Global was tapping customer seg funds to prop up its proprietary positions, which is just about the biggest crime an FCM can commit, right? I saw in a ZeroHedge thread that back in April MF was charging initial margin requirements at 175% of the exchange. So, I decided to cruise on over to the MF Global website and pull up their latest margin requirement guide and compare that to my clearing firm's rates.

Ho-ho-ho. Johnny Corzine was charging massive overages on margin requirements relative to the Exchange's SPAN requirements. And guys, every SPAN margin that I am quoting below is the HIGHER SPEC MARGIN, not hedge. Um, now we know why. Some comparisons:

Corn: MF $3640 SPAN: $2365 = 53.9% overage
Soybeans: MF $5500 SPAN: $3375 = 63.0% overage
Wheat: MF: $3825 SPAN: $3040 = 25.8% overage
Unleaded Gas: MF: $11340 SPAN: $9115 = 24.4% overage
Crude Oil: MF: $9000 SPAN: $8100 = 11.1% overage
Live Cattle: MF: $3780 SPAN: $1620 = 133% overage
30-Year Bonds: MF: $5208 SPAN: $4185 = 24.4% overage

Note how the smaller ag contracts are more heavily inflated than the uber-competitive HUGE contracts like Crude Oil and Bonds.
Here are the two URLs I used:

MF Global's Margin Page (PULL THIS DOWN BEFORE THEY TAKE DOWN THE WEBSITE!) (http://margins.mfglobaldirect.co.uk/futures/margins2.cfm)

Here is the URL for my clearing firm's margins:

http://www.efutures.com/traders/contract_specs.php

Compare and contrast. It looks like MF massively inflated margin requirements so that Corzine could tap the overage between the Exchange's SPAN requirement and the MF Global requirement, and use that difference to prop up his proprietary trades. There ARE NOT WORDS in the English or Greek languages to describe how illegal this is.

Someone please pick this up and run with it. PLEASE.

[osoab]

OK, now there's speculation that what the CME did, was to actually lower the initial margin (rather than raise the maint.)... possibly to help the MF Global debacle:

http://kiddynamitesworld.com/the-cme-margin-notice-that-has-everyone-in-a-tizzy

Probably the most level headed thoughts on the original advisory notice.

Maybe we, as doomtards, want to find the trigger event in everything.

[gunDriller]

GolDang. this is the Mother of All Head Fakes.

they send out a press release which indicates they are raising margin requirements - then send another which semi-clarifies saying they are lowering margin requirements ?

that's the impression i have now, somebody said something about easing the transition of the MF Global bankruptcy.

about which i have a suggestion - send Corzine to Jail, do not Pass go, do not collect bonus.

Jewish & other criminal bankers use the corporate structure to suck money out of the system into their own personal accounts, then they hide behind the corporation when it loses money, like a bully starting a fight and hiding behind his mother's apron.

a play straight out of the Sanhedrin (business law) part of the Talmud.

fvcking ultra-whiney crybaby serial killers. at least Italian Catholic Mafioso aren't whiney crybabies.

[beefsteak]

Osoab,

as in the case of any Tri-Party financial transaction where OPM is concerned, someone can always charge more than the minimums set by the exchanges, and call it "good business practices." It's simply a case of he who has the money makes the rules.

When a 3rd party (clearing member) who has inserted themselves into any transaction involving OPM contractual agreement between buyer and trading exchange where transactions take place and it is the exchange who wrote the basic unilateral contract a futures trading customer signs when applying to open an account in the first place,
expect
"overcharges,
gouging via layering excuses usually re: overhead is expensive yak,
opps I misplaced some of yours,
I may need to borrow from you...no worries...I'll put it back before you know it's missing" ...
.......and all the other bloated pigs' behaviours at the OPM trough.

No different than what we let our banks get away with who are supposedly holding OPM and engaging in sound lending / business practices, which in truth the banks ONLY hold 10c of every dollar IF THAT MUCH.

In the case of MF Global, the current report is that 40% of everyone's account is missing. Hence, the alarm over the expected volatility when markets open on Sunday night...aka tonight.

Imagine a $1,000,000 account PAPER balance owner suddenly finding his/her account is going/being assigned to God Knows Where now...suddenly arriving at said "luck of the draw" underfunded by $400K...
and
the new brokerage firm --who has been working like a dog for days AND NIGHTS now for almost a week----- suddenly deciding which open positions--LONG OR SHORT--to liquidate to bring the "margins back to contractual minimums between the customer and the exchange contract" said now enraged account holder signed originally.

It's going to get even more wild before this is over...and only add to current flotsam of 10s of 1000s of of un-matched trades jamming the backrooms since 2008 Lehman crash event, addressed in my earlier posting.

Hope this helps.


beefsteak

[Horn]

Movement urges big-bank withdrawal


http://www.roanoke.com/business/wb/300737

How does this fit in with the timing?