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CME lowers margins for equity indices 25%
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CME lowers margins for equity indices 25%

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CME lowers margins for equity indices 25%

Source: The Cherry On Top: CME Lowers Equity Index Margins By Over 20% | ZeroHedge

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Fortitudo et Honor
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I guess that means they're not as concerned about volatility as advertised?

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RM99 View Post
I guess that means they're not as concerned about volatility as advertised?

CME is paid on volume, so they are trying to encourage more participation. I think it's always a balancing act between responsibility (aka risk management) of margin policies vs profits from increased participation.

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Fortitudo et Honor
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Big Mike View Post
CME is paid on volume, so they are trying to encourage more participation. I think it's always a balancing act between responsibility (aka risk management) of margin policies vs profits from increased participation.

Mike

Indeed. They try to push the envelope with creating as much volume (which translates to profit) as possible without facing a backlash for too much volatility (from politicians, whales, etc).

The weather on volatility has been quiet for awhile, so I guess they bump the margins down, increase volume and profits and test to see whether the "market" accepts those levels of volatility or gives pushback and rejects those levels.

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Exchanges do not change their margins in order to increase profit. Margins are based on volatility, the notional value of the contract, open interest and when it comes to physical commodities like oil and gold it could also be a reflection of uncertainty (political/economical) as well.

Keep this in mind: the CME group is there to service institutional customers, not us the retail guys.
Therefore, the increase and decrease in margins is a to assist with risk management for the larger players.

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