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Margin requirement changes
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Margin requirement changes

  #1 (permalink)
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Margin requirement changes

There seems to be a pattern recently with margin requirements.

We've seen some pretty big increases, and then InteractiveBrokers completely did away with intraday day trading margins...

Today, ICE doubled the Russell margins...

My guess is CME is next for another round of margin increases.

Just wondering if any brokers care to comment about what this is doing to the retail businesses...

@Dale Box, @mattz, @BrianConnorCTS, @ApexFutures

?

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  #3 (permalink)
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Swell (sarcastic swell that is).... pricing out the little guy. mine hasn't changed yet but see what happens tomorrow

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  #4 (permalink)
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Hi Mike and futures.io (formerly BMT),

Traders are definitely holding less overnights

The Russell is far less liquid than the ES so I can understand why ICE did that.

Here is the latest from the CME -

http://www.cmegroup.com/tools-information/lookups/advisories/clearing/files/Chadv11-279.pdf

I actually prefer the higher margins since too much leverage is often the reason most traders fail. An FCM has the right to set any intraday rate they wish so this doesn't have much of an effect on me. So far I have decided not to raise our current intraday rates.

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  #5 (permalink)
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Some speculate the move is less about volatility and more about pushing retail traders out of overnight positions. Holding overnight (buy the close, sell the open) in a trending market is far more profitable than buying the open and selling the close.

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  #6 (permalink)
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I don't think this is "pricing out the little guy", it's partly to squeeze out excessive speculation, and partly to save the little guy from blowing his account!

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cpi65 View Post
I don't think this is "pricing out the little guy", it's partly to squeeze out excessive speculation, and partly to save the little guy from blowing his account!

CME working to protect the little guy???



Sure I can see the FCM or IB raising margins to actually protect the small trader, but not sure CME is doing it for the same reason.

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  #8 (permalink)
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I didn't mean by design... and, to be honest, overnight margins are ridiculously low as it is imho. Intra day margins are just plain crazy.

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U.S. Commodity Futures Trading Commission


http://www.cmegroup.com/tools-information/lookups/advisories/clearing/files/Chadv11-279.pdf


says the rates will be effective as of close of 8.11.2011

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  #10 (permalink)
Fortitudo et Honor
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Call me a conspiracy theorist...but I think there's a number of reasons that could trigger a margin increase.

Political pressure, second handed pressure from manufacturers who keep getting pinched by higher Gold prices, large movers and shakers like Goldman trying to generate downward pressure in order to enter long positions.....could be any number of things.

Doesn't everyone find it curious that Soros is alumni with the head of S&P, recently dumped non-family capital in order to shroud from the SEC and there was an $850 bet with the downgrade?

Why would any of the exchanges want this? This hurts their bottom line. They're already complaining about the reduction in volume year over year. Hiking the margins hurts their comissions.

I just don't trust that there's any real/ethical motivation or sanity behind these types of decisions. There's always someone who's either pulling the strings or waiting to make a fortune off these events.

"A dumb man never learns. A smart man learns from his own failure and success. But a wise man learns from the failure and success of others."
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