CME Group takes ax to silver margin requirements, again

Less volatility means less risk, so the CME’s letting investors ratchet up the risk in their trading accounts.

At the close of business on April 16, 2012, the CME Group will lower margin requirements for the second time since February. COMEX 500 silver futures will drop by 12.5 percent to $18,900 per contract from $21,600, and the maintenance margin will be lowered to $14,000 from $16,000 per contract.

Less volatility means less risk, so the CME’s letting investors ratchet up the risk in their trading accounts. And yet, margins may still have room to fall.

“The margins are still relatively high compared to a year ago,” Nick Trevethan, senior commodity strategist at ANZ in Singapore, told MineWeb last week. “If we see volatility continue to decrease, there may be more scope for margin cuts.”

Last year, the CME controversially raised margins five times by a total of 84 percent – and they did it over the course of a few weeks between late April and early May. That helps push silver prices down 30 percent. Now, they’re trying to lure investors back into the silver market.

They’re doing it in the palladium and copper markets as well. Copper investors, in particular, are getting a big break. The CME announced that they’re cutting rates for the red metal by 20 percent to $5,400 per contract, and the new maintenance margin will be $4,000.

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