The CME Group, parent of the Chicago Board of Trade, has lowered the initial margin for crude oil for the second time in a month and cut margins on a range of other futures contracts.
The exchange operator on Thursday lowered initial margins for Crude Oil Future NYMEX (CL) by 8.1 percent for speculators to $3,740 per contract from $4,070. CME also cut margins earlier in November.
Brent crude oil jumped $2 to end at its highest in more than a month on Thursday.
The Chicago-based exchange operator also reduced initial margins for Comex gold and silver futures by 9.4 percent and 11.1 percent respectively.
CME lowered Comex 100 Gold futures (GC) margins for speculators to $7,975 per contract from $8,800 and cut Comex 5000 Silver futures (SI) margins to $11,000 per contract from $12,375.
The move partially reversed a 25 percent hike in gold margins in June after prices plunged to their lowest in three years.
Margins are deposits paid by investors in futures markets, where full payment is made when contracts mature, to an exchange or clearing house to cover the risk of default by that investor and typically are based on the largest most-likely daily market move.
Exchanges typically raise margins to mitigate risks as price volatility in the market increases.
CME also cut maintenance margins for gold to $7,250 per contract from $8,000.
The decrease of $750 per contract in gold speculative maintenance margins -- multiplied by both sides of the open interest in the market, which stood at 403,603 contracts on Thursday -- suggests $605 million less in margin escrow.
The exchange operator lowered Comex Copper futures (HG) initial margins for speculators by 14.3 percent to $3,300 per contract and that of RBOB Gasoline futures (RB) by 5.6 percent to $4,675 per contract.
Source:- reuters.com
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