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Another Margin Hike, This Time In Portuguese Bonds

Tyler Durden's picture


Last week it was Ireland, where bond margins rose to over half, or 55%. Now it is Portugal's turn, where following the glowing success of silver speculative destruction (and crude, not so much), LCH.Clearnet has now hiked bond margins from 35% to 45%. Soon everything in the world will trade cash only... except for stocks of course. Stock margin debt is close to an all time high. But nobody is bothered by that particular speculative element. Ever.

From LCH:

Dear RepoClear Member,

accordance with the Sovereign Credit Risk Framework and in response to
the yield differential of 10 year Portuguese government debt against a
AAA benchmark, LCH.Clearnet Ltd has revised the risk parameters for
Portuguese government bonds cleared through the RepoClear service.  The
additional margin required for positions of Portuguese government bonds
will consequently be increased from 35% to 45% for long positions; this
amount will be adjusted for the current bond price*.  Short positions
will pay a proportionately lower margin. 

  1. This
    decision is based solely on publicly available yield spread data and in
    no way represents a forward looking market view. LCH.Clearnet will
    continue to monitor yield spreads closely and keep the parameters under
    close review in accordance with the Sovereign Credit Risk Framework.

  2. The additional margin will be reflected in a margin call on Wednesday 11 May 2011.

  3. For further information please contact either Tom Chapman ( +44 (0)20 7426 6338 or Lianne Arnold ( +44 (0)20 7426 7376


 Chris Jones

Executive Director and Head of Risk Management



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Tue, 05/10/2011 - 11:18 | 1259243 SheepDog-One
SheepDog-One's picture

Good, I hope they raise margins to 100% across the board and so gum up the works it all just comes to a stop. Free money limitless margin for BS 100 P/E stocks, all else cash only up front at the window...OK lets try that!

Tue, 05/10/2011 - 11:31 | 1259308 camaro68ss
camaro68ss's picture

Margin hike bitchez, 100% cash only in NYSE. Hahahaha, That will be the day Obama comes out and says he was not born in america, the FED's tell us they killed kennedy, and The bernake stops printing money

Tue, 05/10/2011 - 12:46 | 1259548 Ratscam
Ratscam's picture

they are trying hard to crash the markets so QE3 can be introduced in June/July

Tue, 05/10/2011 - 11:26 | 1259268 Seacap81
Seacap81's picture

Only Banks are allowed to lever, speculate, fractionally lend, and naked short to infinity.   

Tue, 05/10/2011 - 11:36 | 1259321 willien1derland
willien1derland's picture

True Seacap 81 - "Only TBTF Banks shall lever, speculate, fractionally lend and naked short unto heaven above..."(Excerpt from the 'Holy' Goldman Sach Trading manual, Book of Blankfein 2:1, King Buffet translation) - Tough doing God's work... 

Tue, 05/10/2011 - 11:31 | 1259291 CheapKUNGFU
CheapKUNGFU's picture

fish in a pond, use a net to slowly corner them off (reduce margins in every other area) - then net them out with a huge crash in equities...

s'all going according to plan...


Oh, and, all your margin hikes are belong to us, make your time!



Tue, 05/10/2011 - 11:29 | 1259298 Ruffcut
Ruffcut's picture

Smells like something is brewing and it ain't beer.

Hammer those little speculators, yeah, that's it.  Free markets fixed.

Tue, 05/10/2011 - 11:40 | 1259325 Seacap81
Seacap81's picture

I have a sneaky suspicion - can't prove it - those small specs that were plowed under in silver last week after consecutive margin hikes took their ball and went home, and are buying silver in large quantitities.....and I'm not talking about the digital silver.

Tue, 05/10/2011 - 11:34 | 1259303 willien1derland
willien1derland's picture

LCH.Clearnet had best be careful - Portugal wants to bring a criminal investigation against S&P (as reported by TD yesterday) - I imagine that they will declare war on LCH.Clearnet for this unprovoked act of 'terrorism' by increasing the margin requirement on Portugal's impeccable sovereign debt -

Tue, 05/10/2011 - 11:46 | 1259362 apberusdisvet
apberusdisvet's picture

Getting desperate, aren't they?  Is true price discovery for all manipulated commodities now on the horizon?

Tue, 05/10/2011 - 11:51 | 1259365 Zer0henge
Zer0henge's picture

Portugeese bondage bitchez!

Tue, 05/10/2011 - 11:49 | 1259368 huggy_in_london
huggy_in_london's picture

you people moan about policy being loose yet you complain when the exchanges do the equivalent of tightening... all they are doing is raising hte cost of money in a different way.  You moan about there being too much leverage, well, here you go... its a deleverage.    If you think its going to the moon what do you care?!  This website has become totally one way in thinking, and that is always a bad thing.  Right... now junk away to prove my point!

Tue, 05/10/2011 - 12:00 | 1259382 MrPike
MrPike's picture

If they tightened margin requirements across the board it would be one thing.  However, they are targeting investments that they do not like for tightening. In the long run though, it matters not.  

Tue, 05/10/2011 - 12:02 | 1259389 huggy_in_london
huggy_in_london's picture

actually they target the things where the price has moved significantly.  Its entirely prudent.  

Tue, 05/10/2011 - 13:13 | 1259641 topcallingtroll
topcallingtroll's picture

But they do it in a very opaque manner.

If they would use a formula it would be more fair and more open of a process so that prior knowledge of these hikes couldnt be used by insiders or seen as a manipulation.

Tue, 05/10/2011 - 15:54 | 1260283 huggy_in_london
huggy_in_london's picture

yes, thats a fair point. 

Tue, 05/10/2011 - 12:01 | 1259394 Francis Dollarhyde
Francis Dollarhyde's picture

Who's moaning? I love watching them spend their ammo. And they're spending it in an effort to drive money in particular directions. Herding cattle by shooting in the air. The more they do it, the more they give away their own intent, and the more accustom to gunshots the cattle become.

No junks here. You're absolutely right.

Tue, 05/10/2011 - 11:51 | 1259372 writingsonthewall
writingsonthewall's picture

Isn't this basically credit crunch part deux - the crunch returns?


Cash only trading - no leverage - could be an interesting world where value is dictated by 'worth' and not 'credit levels'.

Tue, 05/10/2011 - 14:59 | 1259453 Urban Redneck
Urban Redneck's picture

No.  The credit crunch was a result of fears about counter party risk.  The first step last time was margin hikes on mortgage paper, the replay is hikes on sovereign paper.  We still have a few more steps to go, including the now outlawed practice of Financial Institution Bankruptcy before we complete the replay.

Tue, 05/10/2011 - 12:01 | 1259385 carbonmutant
carbonmutant's picture

"Short positions will pay a proportionately lower margin."

LOL! Sounds like a forecast to me.

Tue, 05/10/2011 - 12:14 | 1259432 Dick Darlington
Dick Darlington's picture

And now the insolvent Portugal is apparently begging for permanent budget transfers from core Europe to the periphery.

05-10 12:06: Portugal PM says European project has to be deepened to respond to crisis
Tue, 05/10/2011 - 12:45 | 1259543 topcallingtroll
topcallingtroll's picture

Even the stupidest german has figured it out now.

"Permanently subsidize us or we break up the Euro, bitchez."

Tue, 05/10/2011 - 13:32 | 1259704 Dick Darlington
Dick Darlington's picture

And what does the german electorate do? Do they push against or are they playing the normal crumtard role being passive and thinking along the lines "this doesn't effect me right now, so i don't care"?

Tue, 05/10/2011 - 12:38 | 1259527 MonsterBox
MonsterBox's picture

massive stock market margins... that what makes a stock flop and their margin calls so funny.

jump to the street, bitchez

Tue, 05/10/2011 - 13:12 | 1259647 Clowns on Acid
Clowns on Acid's picture

The LCH (given the wink and the nod from the Fed/Treasury) is now asking "What kind of "geese" don't fly....beezhes".

Tue, 05/10/2011 - 13:17 | 1259654 ivana
ivana's picture

Major Tom to ground control, put your helmets on ... shit is about to hit the fan!

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