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ICE Follows In CME Footsteps, Lowers All Initial Margins

Tyler Durden's picture





 

And so another exchange decides to follow in the CME's (clarified) footsteps, and lowers Initial Margins for all in order to facilitate the onboarding of just clients with orphan MF exposure. Probably more important is that the ICE demonstrates how this can be done in a way that does not generate speculation and confusion, and avoids follow up clarifications, due to the counterintuitive nature of increasing initial leverage in the aftermath of an exchange filing bankruptcy due to excess leverage. And as usual, the real question is what would happen in the counterfactual? Would the market really tumble and would liquidations truly be pervasive on Monday is the contract transfer price is not lowered? Is liquidity in the market (and hence leverage) really that low (high)?

Full statement (source):

Exchange Actions Re: MF Global Inc.

 

Effective immediately, ICE Futures U.S. is temporarily lowering the Initial Margin rate for all Speculative accounts to a level equal to the Maintenance Margin rate for all contracts. The Initial Margin rate for hedgers already is the same as the Maintenance Margin rate.

 

This action is being taken to mute the impact of the transfer of accounts from MF Global Inc. to other clearing members that was effected overnight, and thereby support the integrity of Exchange markets.

h/t Janet Tavakoli

 


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Sat, 11/05/2011 - 19:57 | Link to Comment Sudden Debt
Sudden Debt's picture

Would they expect a crash :)
I sure hope so, cheap fuel and cheap silver for all!

Makes you wonder why they need to spend 6 times as much during the next presidential campaigns than in 2008, when just this can make any president popular :)

Sat, 11/05/2011 - 19:59 | Link to Comment trav7777
trav7777's picture

Monday crash is out then?

Sat, 11/05/2011 - 20:03 | Link to Comment cossack55
cossack55's picture

Moved to wednesday to coincide with Emergency Broadcast test.

Sat, 11/05/2011 - 20:12 | Link to Comment holdbuysell
holdbuysell's picture

I saw that announcement on a commercial today: are EAS tests common and do they commonly communicate such planned tests via commercials?

Sat, 11/05/2011 - 20:15 | Link to Comment knukles
knukles's picture

My county medical buds say that the tests are done annually.  Of system, first responders, etc., but this year is new.... national and on major big time Charley level.  Everybody involved. 
Ah hem....

Sat, 11/05/2011 - 20:30 | Link to Comment holdbuysell
holdbuysell's picture

The commericial I saw had a national flavor to it; not local. That's what seemed odd and different to me, but I don't have hard data to suggest this was indeed different.

You're acknowledging that it is indeed different. Thanks for the response, knukles.

Sat, 11/05/2011 - 21:00 | Link to Comment redpill
redpill's picture

Ponzi on Wayne!

Ponzi on Garth!

Irresponsible leverage world, party on, excellent

Sat, 11/05/2011 - 21:04 | Link to Comment CrazyCooter
CrazyCooter's picture

War or hangings!

<see past posts for why/>

Regards,

Cooter

Sat, 11/05/2011 - 22:40 | Link to Comment Divided States ...
Divided States of America's picture

This is BS...these fuckin speculators get a break when shit hits the fan but I dont see the poor and middle class people catch a break when oil and food prices rocket up, jobs are lost or shifted overseas, banks start charging for every little thing, taxes going up, healthcare and education going down. I say let these fuckers go down like everyone else.

Sun, 11/06/2011 - 01:06 | Link to Comment Pinto Currency
Pinto Currency's picture

 

 

Divided,

The exchanges (Comex, CBOT, etc.) are price control mechanisms.

The weak handed specs were blown-out in Sept. and Oct. and strong hands remain (especially in silver).

It appears they are lowering margin requirements to entice weak-handed specs back in so that the bullion banks (who control the exchanges - make no mistake about it) can sell down the metals and take out the stops of the weak again.  Hard to cascade down the metals prices when what are primarily left are strong handed players.

Sun, 11/06/2011 - 08:19 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Yup.....no crash for Trav.

 

Buy gold and silver you silly rabbit....it's going to be the only thing left.

Sun, 11/06/2011 - 10:38 | Link to Comment Smiddywesson
Smiddywesson's picture

"The exchanges (Comex, CBOT, etc.) are price control mechanisms.

The weak handed specs were blown-out in Sept. and Oct. and strong hands remain (especially in silver).

It appears they are lowering margin requirements to entice weak-handed specs back in so that the bullion banks (who control the exchanges - make no mistake about it) can sell down the metals and take out the stops of the weak again.  Hard to cascade down the metals prices when what are primarily left are strong handed players."

 

It's distinctly possible.  TPTB utterly failed to keep gold at the interday low ($1534?) and then it bounced up to a range of $1600 to $1650 where it stayed despite weeks and weeks of failed attempts to drive it lower.  That $1600 level was rock solid.  The repeated attacks on gold were too successful, and combined with the margin hikes, all the weak hands were frightened away, leaving only strong hands, and I suspect, drawing new strong hands into the trade.  Now we seem unable to bust through support at $1700.  

So what's an honest manipulator to do when he is losing the tug of war?  Let go of the rope to knock the opposition on their backsides and then haul them through the mud.  Maybe we'll see prices rise into the $1800s soon while they lure in retail and other weak hands, setting up for another take down.  

Sun, 11/06/2011 - 12:55 | Link to Comment Barry Mcokiner
Barry Mcokiner's picture

Divided States, while I understand your frustration, I feel maybe you can be more help if you grabbed a sign and hung out with the OWS people. As a floor broker at the cme, I was pleased to hear about this. This not only helps the floor traders who have been locked out and assets frozen, but also get the smaller speculators (i.e the farmers) back in the game. We also, with volume returning will be able to hire those unfortunate MF employees who are now out of work. We are not all assholes, just people like you trying to make a living. You watch too much TV and need to understand fully what a speculator is, and why they are needed.

Sun, 11/06/2011 - 14:51 | Link to Comment Pinto Currency
Pinto Currency's picture

Barry,

I don't think that the margin requirements for America's commodity exchanges are reduced to show compassion for MF Global traders.  The question is why open the gates now to entice in the small spec traders?

A great deal of effort has been expended since March to blow the small spec traders out of gold and silver especially.  If the past is any guide, they will be invited in with open arms, plied with cheap booze until they are good and drunk, then beaten up and thrown out of the door like all of the countless times in the past. 

It is very hard to whipsaw commodity prices when all that are left in the room are strong hands.

Sat, 11/05/2011 - 22:35 | Link to Comment seek
seek's picture

This test is indeed different. Normally they test segments (state, local, or fed to state) this is the first time ever that they will be doing a nationwide end-to-end test, i.e. someone flips a switch in DC and the entire country's EAS is activated simultaneously.

it's also unusual because some technical geeks pointed out that they are breaking the EAS's own protocol in a subtle way. Basically, the new EAS system will activate relatively new TVs and radios to automatically tune to the primary EAS channel -- this is new -- and they break the protocol because they're supposed to send an "emergency action termination" signal so the TVs/radios go back to the original programming, and they're not sending that signal. This particular bit a strange since it's how the end of the test is normally relayed. I'm sure there's a reason for why they're doing it this way, but I have no idea what it is.

Sun, 11/06/2011 - 00:14 | Link to Comment Oh regional Indian
Oh regional Indian's picture

This test is indeed differenter because it co-incides with two days (8th-9th) that are supposed to be high Earthquake probability dates. 

Due, in part to Asteroid YU 55... Why You 55?

Had to be some juicy run-up to 11-11-11, eh?

ORI

And the Circus rolls on...

Sun, 11/06/2011 - 00:48 | Link to Comment UP Forester
UP Forester's picture

So when exactly on Wednesday does the IAEA report on Iran's nuclear program get released?

Sun, 11/06/2011 - 11:25 | Link to Comment Randall Cabot
Randall Cabot's picture

And wednesday is 11-9-11! Too many 9s and 11s coming up-these NWO sickos love these numbers-the emergency test on 11-9-11 could be cover for an attack on Iran!!!

Sat, 11/05/2011 - 23:17 | Link to Comment Michael
Michael's picture

They could do the test at 2am when it won't bother too many people but they have to let everyone know whose wearing the jack boots.

In other news, I take great pleasure in reporting, Thank You God for the extended solar minimum;

CEO: “The market for carbon capture and storage is dead”

"The Norwegian company Aker Clean Carbon may be closed. Its value is set to zero. The market for carbon capture and storage is dead according to their CEO.

Guest Post by Geir Hasnes, Norway

Article in today’s net edition of Norwegian Teknisk Ukeblad (Technological Weekly).
 

Aker Clean Carbon may be closed

This article brings important news especially damaging for the Norwegian politicians and believers in carbon capture and storage because Norway has put itself as the avant-garde of this totally useless technology and spent untold billions of dollars on it. The moon-landing that crashed that is referred to in the article refer to Norwegian prime minister Stoltenberg’s way of comparing the development of a technology for carbon capture and storage as equivalent to the US project of putting a man on the moon. The price tag of the Mongstad moonlanding project became too high and untold obstacles kept popping up continuously during the project until it crashed last year."

http://wattsupwiththat.com/2011/11/04/ceo-the-market-for-carbon-capture-and-storage-is-dead/ Senator Jay Rockefeller(D-WV)

July 14, 2011

ROCKEFELLER STATEMENT ON AEP’S DECISION TO END CCS DEMONSTRATION PROJECT

http://rockefeller.senate.gov/press/record.cfm?id=333500&

 

At Last: Britain Pulls Plug On Green Energy Boondoggle

The Government Giveth and the Government Taketh Away –-Famous green proverb

http://wattsupwiththat.com/2011/11/01/britain-pulls-the-plug-on-solar-subsidies/

 

Sun, 11/06/2011 - 06:41 | Link to Comment css1971
css1971's picture

Terra Preta.

The idea of building plant to capture CO2 was a fucking stupid idea from the start. No idea who came up with it. Clearly they hadn't done any sums, or if they had they said fuck it, politicians are dumb as slime maybe they'll buy it anyway.

Sat, 11/05/2011 - 20:31 | Link to Comment Growyourownfood
Growyourownfood's picture

People don't bash ZH because its negative, they bash it because it is one-sided and it never fesses up to wrong calls or mistakes. You assumed that a 1.0 ratio of initial to maintenance margin meant the maintenance would get raised. Based on this you told everyone to hit the panic button. Your assumption was dead wrong: in fact its the initial margin being reduced in order to make the ratio equal to 1.0. Simple. You were wrong. There is no need to insert petulant qualifiers like "clarified" footsteps in a vain and childish attrempt to be at least partially correct. Always needing to be right is very pathetic, not to mention shows extreme insecurity and egotism.

Sat, 11/05/2011 - 20:38 | Link to Comment gorillaonyourback
gorillaonyourback's picture

wow, who squashed the jelly out of the sock puppets donut?

maybe they didn't want to loose all the paper contact money to physical asshole.  just because people posit assumptions doesn't mean the MAN (cme) is acting in your favor.

Sun, 11/06/2011 - 17:22 | Link to Comment phyuckyiu
phyuckyiu's picture

I look forward to 'growyourownfood' starting a blog. Actually, i'm not praticing impeccable journalism, I'm really -not- loooking forward to it. He should stay in the hills where he can live off of his self grown Cubensis fungii.

Sat, 11/05/2011 - 20:42 | Link to Comment greased up deaf guy
greased up deaf guy's picture

did i miss something? what wrong call did zh make? they simply shed light on a vague margin rule change the cme announced. the fact that the cme itself came out and issued a clarification would suggest zh's contention was correct.

Sun, 11/06/2011 - 04:14 | Link to Comment Element
Element's picture

But more to the point, why piss on zh's cred, rather than the MSM's on-going total lack of any at all?

Sat, 11/05/2011 - 21:03 | Link to Comment redpill
redpill's picture

 

Never fesses up to wrong calls or mistakes?

 

http://www.zerohedge.com/news/cme-issues-clarification-margins-usher-mor...

 

"Our gut interpretation was that "Unless we are completely reading it incorrectly, it is nothing short of a margin call for tens if not hundreds of billions worth of product." Judging by the broad response, our initial reaction is what a prudent, logical human being would assume: after all, it is precisely the undercollateralization of customer accounts, and general underfunding at MF Global that is what brought that particular company down. Well, we were wrong."

 

Any other lame generalizations?

Sat, 11/05/2011 - 21:08 | Link to Comment Kina
Kina's picture

That was a pretty dishonest assesment by you. Deliberate? I think the complaint you make points directly to you.

The ZH article did no such thing, go read it. Yet another dumbass that doesn't read the articles but rushes into make dumb comments.

You ought to be able to sort out the dfference between what the article says and what some commenters then respond.

Sun, 11/06/2011 - 11:29 | Link to Comment Raging Debate
Raging Debate's picture

Correct. If ZH wishes to meet the demand now smacking them in the face it also needs to evolve. At the detail level if the article title was posed as a question it would have still drawn the same positive readerhip bump but it would have drawn in varied commentators. ZH is being called out as ignorant about standardized publishing norms. And those calling you out are right. While I understand defending the value of the information provides, the initial branding and lack of standardization has created a binary problem for ZH.

Now, any of ZH staff can call me to get the tools you need be them code, consulting. 603-953-3388.

I put my phone number up a lot online. But it is only bankers or ex-bankers call me. Some of you solid rugged individualists should perhaps consider collabation over competition. But the society has been pushed into a pyramid mold so there are subconscience effects of crying out to Pharoah. If Pharoah ultimately crushes your necks it will be because you fell for it. Not what happened the last hundred years but now moving forward.

Sat, 11/05/2011 - 21:45 | Link to Comment Lord Welligton
Lord Welligton's picture

What in the name of fuck are you talking about?

Go back to "growingyourownfood" you might have more success.

Christ on a bicycle how can anybody be so dumb.

Sun, 11/06/2011 - 08:25 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

....and while everyone was freaking out. GetZee calmly pocketed the gold from table to table.

 

It's an old Rothschild trick.

Sun, 11/06/2011 - 11:35 | Link to Comment Raging Debate
Raging Debate's picture

Read my comment above. You have failed Lord Wellington to absorb ghe lessons of the pyramid by allowing your mind to be closed and noy conducting research on what your adversary is. The adversary is the model. Now that we are going to offer Pharoah something better he can only make the choices of evolving or chasing his slaves into his own extinction. Won't be fun on the way but it is what it is. I wish to at least make the offer which is an inclusive process.

You are ignorant on the topic of publishing standards. You just made yourself look very foolish. Was that the intent?

Sun, 11/06/2011 - 17:13 | Link to Comment phyuckyiu
phyuckyiu's picture

We look forward to your blog about Pharoahs and impeccable journalism. NOT.

Sat, 11/05/2011 - 22:02 | Link to Comment RebelYell
RebelYell's picture

So, start your own website and fess up to your own endless blunders, douche.

Sun, 11/06/2011 - 17:42 | Link to Comment phyuckyiu
phyuckyiu's picture

I agree, I'd love to see his blog about how to grow your own Cubensis. We are all waiting with baited breath for the launch.

Sat, 11/05/2011 - 22:04 | Link to Comment Deadpool
Deadpool's picture

I thought I was wrong once, but I was wrong.

Sat, 11/05/2011 - 22:16 | Link to Comment Ganja Jane
Ganja Jane's picture

"I have only been wrong once: I thought I was wrong when I was actually right."

Sat, 11/05/2011 - 22:08 | Link to Comment Ganja Jane
Ganja Jane's picture

Zero Hedge calls out the manipulation in the markets; what one does with this information is at his own risk.

 

 

Sat, 11/05/2011 - 22:32 | Link to Comment Piranhanoia
Piranhanoia's picture

Must be 24 hours after the first announcement and you have it figured out.  Fill us in please.

Sun, 11/06/2011 - 05:08 | Link to Comment Monedas
Monedas's picture

Grow your own food ? Stop eating your own cooking ! Monedas 2011 Obama is the worst insult to black people....since the O J Simpson jury !

Sun, 11/06/2011 - 08:37 | Link to Comment Greyhat
Greyhat's picture

"People don't bash ZH because its negative, they bash it because it is one-sided"

Reality is always one-sided. There is a border between dream and reality.

 

"Is liquidity in the market (and hence leverage) really that low (high)?"

Better question: Do some players need more ammunition now? And on wich target do they want to shoot it?

 

Sat, 11/05/2011 - 21:07 | Link to Comment holdbuysell
holdbuysell's picture

I went to FEMA and found the briefing:

"FEMA, in coordination with the Federal Communications Commission (FCC) and the National Oceanic and Atmospheric Administration (NOAA), will conduct the first nationwide Emergency Alert System (EAS) Test on November 9, at 2:00 p.m. Eastern."

http://www.fema.gov/emergency/ipaws/eas_info.shtm

 

Sat, 11/05/2011 - 21:21 | Link to Comment Hobbleknee
Hobbleknee's picture

They never thought of doing that during the whole 80s when Russia had all its nukes pointed at us?  Brilliant!

Sat, 11/05/2011 - 22:18 | Link to Comment Ganja Jane
Ganja Jane's picture

Sure....but now we have the internet and growing awareness. Gotta check that kill switch!

Sun, 11/06/2011 - 00:50 | Link to Comment UP Forester
UP Forester's picture

Worked pretty well on 9/11/01, eh?  Guess they're trying to make up for it on 11/9/11....

Sun, 11/06/2011 - 11:06 | Link to Comment Ganja Jane
Ganja Jane's picture

We're riding the same wavelength.

It's all about understanding history.

Sun, 11/06/2011 - 00:12 | Link to Comment baseball13
baseball13's picture

Did you leave out Asteroid 2005 YU55? Passing WITHIN the moons orbit of earth on Wednesday, November 9th...

 

http://neo.jpl.nasa.gov/news/news171.html

 

Sun, 11/06/2011 - 01:32 | Link to Comment DrunkenPleb
DrunkenPleb's picture

The moon's orbit is 385 000 km. 0.85 of lunar orbit's not all that close...

Sun, 11/06/2011 - 05:16 | Link to Comment Monedas
Monedas's picture

If the asteroid passed between the earth and the moon....maybe we could see it with our naked, lying eyes ? Monedas 2011 Since the distraction of Obama and O J Simpson.....Jimmy Carter has a window of opportunity to re-invent himself ! 

Sun, 11/06/2011 - 11:10 | Link to Comment Ganja Jane
Ganja Jane's picture

http://www.youtube.com/watch?v=cmVLYaxHnPA

He is fascinating! I don't go all in but he is pointed in a direction I am headed.

www.enterprisemission.com/

en.wikipedia.org/wiki/Richard_C._Hoagland

Sun, 11/06/2011 - 12:38 | Link to Comment Randall Cabot
Randall Cabot's picture

 

Puleeeezzze!!! Hoagland is a total nutball-I can't think of anything he was ever proven right about-and I've been a C2C listener since 1997!!!

Sat, 11/05/2011 - 21:38 | Link to Comment DeadFred
DeadFred's picture

It gives such a nice sense of national unity, like when they had all those fine National Guardsmen stop their day jobs to guard our airports.

Sat, 11/05/2011 - 21:52 | Link to Comment Ted K
Ted K's picture

In a totally separate announcement Metamucil and bran cereals will not be available on shelves Tuesday.

Sun, 11/06/2011 - 00:23 | Link to Comment Buck Johnson
Buck Johnson's picture

No kidding, heading off a monday crash.

Sun, 11/06/2011 - 04:09 | Link to Comment Element
Element's picture

Moved to wednesday to coincide with Emergency Broadcast test.

 

Right after the two minutes of hate.

Sun, 11/06/2011 - 06:13 | Link to Comment UP Forester
UP Forester's picture

I thought the EBS test was to introduce the IAEA results, Big Sis telling us to hiss-boo Emmanuel Ahmedinejad....

Sat, 11/05/2011 - 20:11 | Link to Comment tmosley
tmosley's picture

Look at what you are.  Are you really happy like this?  Lying to strangers on the internet?

Sat, 11/05/2011 - 20:25 | Link to Comment Libertarians fo...
Libertarians for Prosperity's picture

 

 

Holy shit! 

This just caught me flat-footed.  Anyone else?  My models are showing a 97% probability of a COMEX default on Monday.  The industrial panic is coming, prepare accordingly. 

Very fluid situation right now.... lots of wild cards....

 

 

Sat, 11/05/2011 - 20:39 | Link to Comment tmosley
tmosley's picture

Interesting.  You leap to his defense, even though he is the worst type of disgusting human trash to a liberal such as yourself.  I wonder why?

Sat, 11/05/2011 - 23:13 | Link to Comment trav7777
trav7777's picture

it's because he, like me, recognizes how much of an idiot you are

Sat, 11/05/2011 - 23:18 | Link to Comment jeff montanye
jeff montanye's picture

often when three gather it degenerates into two against one.

Sun, 11/06/2011 - 00:02 | Link to Comment tmosley
tmosley's picture

Ri~ight.  The guy who thinks everyone is going to die from resource depletion, but there is no way there could ever be a period of "Mad Max" lawlessness thinks someone else is an idiot.

Sun, 11/06/2011 - 07:48 | Link to Comment Rollerball
Rollerball's picture

Forty daze & knights:  11/11/2011-12/21/2011?

Sat, 11/05/2011 - 21:15 | Link to Comment CrazyCooter
CrazyCooter's picture

I assume sarcasm.

I have a simple question; in five years what is your plan to afford a days worth of rice for yourself/family?

Please do not propose prostitution.

Regards,

Cooter

Sun, 11/06/2011 - 00:53 | Link to Comment UP Forester
UP Forester's picture

Prostitu.....  oops.  I guess I'll grow potatoes and trade 'em for rice....

Sat, 11/05/2011 - 20:50 | Link to Comment DormRoom
DormRoom's picture

All this makes me so angry!  Government is bending over backwards to accomodate speculaters, so the financial elite can continue giving both parties campaign fundrasing dollars, as the real economy withers. And decent folk lose everything.

 

If the American Revolution started with a bunch of angry citizen pouring tea into the Cheasepeke, I hope the new American Revolution, begins with ppl changing their bank!

 

Shut it down!!!!!!!!!!!!!!

 

#occupywallstreet

Sat, 11/05/2011 - 21:18 | Link to Comment CrazyCooter
CrazyCooter's picture

So, am I understand that you insist that government should GTFO your tree of liberty?

http://www.thesun.co.uk/sol/homepage/news/3909908/Tree-climbing-goats-ar...

Regards,

Cooter

Sat, 11/05/2011 - 23:24 | Link to Comment jeff montanye
jeff montanye's picture

strong goats.

Sun, 11/06/2011 - 08:11 | Link to Comment OldPhart
OldPhart's picture

Fuckin' goats, they're like locusts...or puppies.  They loveable as hell, but geezus christy, they get into everything! 

Sat, 11/05/2011 - 21:20 | Link to Comment Race Car Driver
Race Car Driver's picture

Er... it was the Boston Tea Party - and the tea was thrown into the Boston Harbor.

Sat, 11/05/2011 - 21:34 | Link to Comment DormRoom
DormRoom's picture

. facepalm

Sat, 11/05/2011 - 23:49 | Link to Comment CrazyCooter
CrazyCooter's picture

It had a lot more to do with money (i.e. what KIND of money the colonies had to pay to the UK) than you realize. It wasn't the taxes per se, it was the taxes had to be paid in gold/silver to the UK. Eventually the UK cracked down on the state based fiat systems ... and ... well ... the rest is history as they say.

Regards,

Cooter

Sun, 11/06/2011 - 05:24 | Link to Comment Monedas
Monedas's picture

I thought he was talkin' 'bout Peak Cheese ? Monedas 2011 Everyone knows the Patriots threw oyster crackers into the Chesapeake bay ?

Sat, 11/05/2011 - 23:23 | Link to Comment jeff montanye
jeff montanye's picture

for that matter, chesapeake.  but i like your spirit.

Sun, 11/06/2011 - 11:38 | Link to Comment Randall Cabot
Randall Cabot's picture

I'm pretty sure it was the Potomoc.

Sat, 11/05/2011 - 22:03 | Link to Comment Stonecold
Stonecold's picture

If they wanted to prevent margin calls they would lower the maintence level.   Why would they reduce initial?  Do they know how to trade futures?  I trade futures.

Sat, 11/05/2011 - 23:10 | Link to Comment PsychicWebbah
PsychicWebbah's picture

Because transfer of accounts would force the full collateralization in accordance with CFTC rules. It is a technicality.

Sat, 11/05/2011 - 23:14 | Link to Comment island
island's picture

Yeah, apparently this ploy is actually just to make entry easier - and then bam, margin calls will be in abundance.  Given the market's volatility, I guess one could view this as an attempt to cull out those without the moolah to play the game.

Sat, 11/05/2011 - 20:02 | Link to Comment cossack55
cossack55's picture

Presidents are only popular as long as they are giving other people's money away.  Carter's big mistake. Well, among other big mistakes.

Sat, 11/05/2011 - 21:42 | Link to Comment holdbuysell
holdbuysell's picture

That's right. Let the overleveraged paper market tank, resulting in a fire sale on the physical underlying.

Judging by the actions of the exchanges, they're working to avoid that.

Sun, 11/06/2011 - 11:46 | Link to Comment disabledvet
disabledvet's picture

the irony of course is that "buying the Presidency" really doesn't do all that much. Most of the policy decisions have already been made. Not only that but the Office isn't subject to "changing" all that easily. In fact that's true for pretty much all the principals on The Hill. The only exception it appears is amazingly enough The Federal Reserve!

Sat, 11/05/2011 - 20:03 | Link to Comment oogs66
oogs66's picture

Cheap shorts!!! But seriously, more debt to fix a debt problem, and more leverage to fix a leverage problem. Thank god they aren't in charge of child molesters !

Sat, 11/05/2011 - 21:48 | Link to Comment JesusUp
JesusUp's picture

but they are

Sat, 11/05/2011 - 20:04 | Link to Comment pleseus
pleseus's picture

Risk on today. Risk off tomorrow. The winds of fear and hope toss the markets to and fro. When will this storm end?

Sat, 11/05/2011 - 20:08 | Link to Comment TradingJoe
TradingJoe's picture

Very very very soon!!!

Sat, 11/05/2011 - 20:09 | Link to Comment WonderDawg
WonderDawg's picture

When? Good question. The outcome (crash) is inevitable. The only question is when. Fortunes hang on the answer.

Sat, 11/05/2011 - 21:22 | Link to Comment erg
erg's picture

I think it's more politically expedient if the O Team can convince all to wait a year to bomb Iran.

However, as I mentioned to a friend earlier today; pushing for +$200 oil while the world economy teeters drunkenly is so crazy they may just do it.

Sat, 11/05/2011 - 22:11 | Link to Comment CompassionateFascist
CompassionateFascist's picture

If Zero wants his campaign ZOGbux, he'll have to attack Iran...prolly July-August 2012. If the Universal Paper Ponzi hasn't collapsed by then, this should do it, as Straits of Hormuz closure will cut off most of Japan/China oil supply. They'll then shed dollars like confetti as oil prices skyrocket, dollar gets run, and all dollar-denominated paper - including the US economy - burns up. All this, in turn, leading into a 3-way Prez election (Paul vs. Romney vs. Obama) that Zero might well win in the EC while losing the popular vote 60-40. Result: a Perfect Storm - international war + Civil War + economic collapse - that will not end for many years. Or may well end in One Bright Flash.

Sat, 11/05/2011 - 23:15 | Link to Comment trav7777
trav7777's picture

it'll all be Busch's fault, so wtf is the difference?

I cannot wait for the debates and campaign where he goes on the Blame Busch tour in every speech.  If you drink when he says "inherited" you will be comatose in short order

Sun, 11/06/2011 - 00:55 | Link to Comment UP Forester
UP Forester's picture

Busch gives me the shits.  I like LaBatt's....

Sat, 11/05/2011 - 20:07 | Link to Comment SHEEPFUKKER
SHEEPFUKKER's picture

Mutha F'ing Global must have been net short. Let's lower margins.  The clerks don't need to make any calls then.

Sat, 11/05/2011 - 20:07 | Link to Comment Dr. Engali
Dr. Engali's picture

They are getting desperate. Lower margins on stock and higher margins on gold. Because we all know that's stocks aren't volatile.

Sat, 11/05/2011 - 20:08 | Link to Comment Mr. Lucky
Mr. Lucky's picture

More chewing gum and bailing wire?

Sat, 11/05/2011 - 20:52 | Link to Comment DormRoom
DormRoom's picture

And the government is all out of chewing gum....

Sat, 11/05/2011 - 20:16 | Link to Comment knukles
knukles's picture

As I'd noted earlier with  respect to the CME margin diminutions:

What if the Screws Were Turned by the Big Powers that Be?
Like the City of London, Rothschilds, BoE, Fed, Rubin, Dimon, etal?
I'm not into conspiracy theory or behind the scenes shady Wizard of Oz tripe, but here we have situations....  
A fucking series of Absolute Disaster Meetings of the World's Most Powerful Politicians Accomplishing Fuck All Nothing.  (Bad Karma... Enuf is Enuf for Fuck's Sake.)
Europe falling apart
Euro is falling apart
TPTB in Europe stumbling about like the Keystone Cops, but not as funny.
#Occupy gaining momentum and attracting violence (regardless of what one thinks about them, it is what it is) when there are millions of disenfranchised dissatisfied folks out there.
Pull Your Money From The Bank Days.... With participation of the MSM
no less!
MF Global.... could trigger a Lehman 2.0 if mishandled (Thanks, Jon)
Possible Panic Liquidations of Commodity Positions...
There's a big list that goes on and on....

Just not out of the realm of possibility that this is an integral part of "keeping it together" when Asia opens in 24 hours.....

Keeping it together my ass, come to think of it...
Keeping the Lid on, Period.

----------------------------------

Yup, and with the ICE following, nothing short of systemic measures.

Somebodies be mighty worried folks.... bet they'll start leaning on the PM's real hard out of the gate during Asia low liquidity time....

Sat, 11/05/2011 - 20:26 | Link to Comment WonderDawg
WonderDawg's picture

Hiya, Knuks! Happy Saturday night to you. Everything you just listed was pretty much predictable (and most of it was predicted) if you partake of Socionomics and the wave theory of human behavior. And expect things to get much worse before they get better. Some other things you'll notice in the near future: increasing authoritarian influences, more friction and hostility between and among groups (which is why I give the Occupy movement little chance of becoming a cohesive force); increasing violence and social unrest; increasing anger toward the TBTF institutions, including the Fed; decreasing tolerance for opposing views; darker colors in fashion; a move toward protecting individual privacy (which will eventually doom Facebook); decline in popularity of baseball and basketball (bull market sports) and increasing popularity of more violent sports (football, UFC); increasing hostility between the poor (formerly middle class) and the rich, with the anger toward the rich resulting in people of wealth seeking to disguise their wealth, rather than flaunt it. Other extrapolations can be made with regard to entertainment, politics, the economy, fashion, and other social markets. Socionomics is an interesting study, if you're inclined.

Sat, 11/05/2011 - 21:38 | Link to Comment Mentaliusanything
Mentaliusanything's picture

Knuckles - you forgot to add

The transfer by threat of 50% of the Greek debt from one balance sheet to another. The Other got handed a shit sandwich and they have to cover it. And it appears they are a little short in the Cash department ATMO

The CDS farce which means the Banker bookies can't off lay the bets which leads to a Dichotomy. You know your a lying bag of shit and they know you know they are as well which leads to total mistrust not only between banks but Nations. Credit is freezing up& trust is melting down. Pity about the Greek banks being shorn - Nationalization now the only option same a Ireland.

remember - when you want it back "the Check is in the mail" joke applies

http://blogs.reuters.com/unstructuredfinance/2011/11/05/mf-global-and-the-rubber-check/

So ........ check... testicles, spectacles, wallet and WATCH

Sat, 11/05/2011 - 21:52 | Link to Comment Lord Welligton
Lord Welligton's picture

As posted below .

"This action is being taken to mute the impact of the transfer of accounts from MF Global Inc. to other clearing members that was effected overnight, and thereby support the integrity of Exchange markets.

There is a Big Big Big problem here."

Sun, 11/06/2011 - 12:01 | Link to Comment disabledvet
disabledvet's picture

I thought MF was a "no biggie"? Of course i've had doubts ever since Mr. Corzine fled the scene...

Sat, 11/05/2011 - 21:59 | Link to Comment web bot
web bot's picture

MSM is saying that OWS movement are nothing more than a bunch of well-to-do kids. MSM however is missing the point... a bunch of well-to-do kids with little to no future, where the middle class is being eroded through drop in purchasing power of the USD.

 

Sat, 11/05/2011 - 23:38 | Link to Comment gwar5
gwar5's picture

Obama is encouraging the OWS while his friends are looting the banks. His street ops are nicely directing the focus away from the FED/squids and towards the "social injustice" of the "capitalist" system, using the banks and the rich as a proxy for capitalism in general.

There's a convenient war with Iran looming with oil shortages that can be scapegoated when things get dire.   

Afterwards, the TPTB will pull out that 80+ page playbook drawn up in Davos 2010 for an IMF World Central Bank with newfound UN hegemony over sovereigns (rewarding the politicians). Oil will flow again, Saudis grateful for a vanquished Iran. All will be well again in Fiatville.

Meantime, nothing softens up the angry opposition for more debt slavery like giving them constant body blows in the form of uncertainty, debt, lack of jobs, street riots, no gas, and lack of food. See, they have to make us beg for it to make it look like it was all our idea so the NWO will have any legitimacy.

 

 

 

 

 

 

 

 

Sat, 11/05/2011 - 23:57 | Link to Comment CrazyCooter
CrazyCooter's picture

Well said.

There was a con going on for many, many years. This con had many big players. Each sees that their theater is on fire and each is now acting in their own self interest. This is the disconnect in the story line across the board.

Things are simply coming unglued and all hell is about to break lose.

Regards,

Cooter

Sat, 11/05/2011 - 20:14 | Link to Comment topshelfstuff
topshelfstuff's picture

I'll post/paste this again. I believe you have to consider the Initial Margin that MF charged, the amount the client accounts have now. Considering that a Lowering makes sense.

Scoop for a journalist! MF Global Inflated Margins Posted by Ann Barnhardt - October 31, AD 2011 7:05 PM MST

Um, Journalists? ZeroHedge people? Mr. Denninger? Market-Ticker forum people? You might want to pick this up and triple check me on this.

Okay, the NY Times and Reuters are reporting the MF Global was tapping customer seg funds to prop up its proprietary positions, which is just about the biggest crime an FCM can commit, right? I saw in a ZeroHedge thread that back in April MF was charging initial margin requirements at 175% of the exchange. So, I decided to cruise on over to the MF Global website and pull up their latest margin requirement guide and compare that to my clearing firm's rates.

Ho-ho-ho. Johnny Corzine was charging massive overages on margin requirements relative to the Exchange's SPAN requirements. And guys, every SPAN margin that I am quoting below is the HIGHER SPEC MARGIN, not hedge. Um, now we know why. Some comparisons:

Corn: MF $3640 SPAN: $2365 = 53.9% overage
Soybeans: MF $5500 SPAN: $3375 = 63.0% overage
Wheat: MF: $3825 SPAN: $3040 = 25.8% overage
Unleaded Gas: MF: $11340 SPAN: $9115 = 24.4% overage
Crude Oil: MF: $9000 SPAN: $8100 = 11.1% overage
Live Cattle: MF: $3780 SPAN: $1620 = 133% overage
30-Year Bonds: MF: $5208 SPAN: $4185 = 24.4% overage

Note how the smaller ag contracts are more heavily inflated than the uber-competitive HUGE contracts like Crude Oil and Bonds.

Here are the two URLs I used:

MF Global's Margin Page (PULL THIS DOWN BEFORE THEY TAKE DOWN THE WEBSITE!)

Here is the URL for my clearing firm's margins:

http://www.efutures.com/traders/contract_specs.php

Compare and contrast. It looks like MF massively inflated margin requirements so that Corzine could tap the overage between the Exchange's SPAN requirement and the MF Global requirement, and use that difference to prop up his proprietary trades. There ARE NOT WORDS in the English or Greek languages to describe how illegal this is.

Someone please pick this up and run with it. PLEASE.

Sat, 11/05/2011 - 20:48 | Link to Comment gorillaonyourback
gorillaonyourback's picture

seems you have something there,,,,,,  how stupid would one be to be doing business with mfg

Sat, 11/05/2011 - 22:28 | Link to Comment the grateful un...
the grateful unemployed's picture

so maybe they're just running a front for the Feds trading desk? why are they so into euro sovereign debt? Corzine = Democrat Obama = Democrat? suddenly JPM finds the missing money in their sock bag? come on

Sat, 11/05/2011 - 21:55 | Link to Comment Lord Welligton
Lord Welligton's picture

Excellent work.

Sorry can't help. I have no power.

Sat, 11/05/2011 - 22:30 | Link to Comment gwar5
gwar5's picture

Good get.  I'm nauseated by all of his stuff. I puke, but then I'm still nauseated. 

Here's another recent one:  And Now We Know Why Nobody Took Madoff Whistleblower Harry Markopolos Seriously... - Business Insider

Harry Markopolis, the Madoff whistleblower, finds Bank of New York was routinely overcharging large accounts (over years) on foreign exchange trades -- $6-10 Billion in theft.  But BONY is a major exchange for government bonds so it is likely little will happen to them, we're waiting. TDTF - Too depraved to fail.

 

 

 

 

 

 

Sun, 11/06/2011 - 00:21 | Link to Comment Bear
Bear's picture

"There ARE NOT WORDS in the English or Greek languages to describe how illegal this is." ... "MFing assholes" is descriptive enough ... they should all go jail along with every government employee that had anything to do with regulating this company. And they (SEC, CTFC, etc) need to investigate the practices of every other broker / dealer in how they 'use' customers margin accounts.

I encourage every E-Trade customer to immediately move all their accounts to another firm. 

Sun, 11/06/2011 - 12:08 | Link to Comment disabledvet
disabledvet's picture

who says there's nothing in a name?

Sat, 11/05/2011 - 20:19 | Link to Comment Schmuck Raker
Schmuck Raker's picture

Nooooooowwwww I get it.

Thanks Tyler.

Sat, 11/05/2011 - 20:20 | Link to Comment Unprepared
Unprepared's picture

Yesterday I said while quoting CME's initial e-mail "review of market volatility to ensure adequate collateral coverage":

 

"Maybe, but the following justification would lose all its meaning if they are decreasing the Initial margin. I don't see them doing it (I know, I know, I should never underestimate their stupidity, but still)"


Ok, go ahead and junk me.

Sat, 11/05/2011 - 20:25 | Link to Comment Oswald Spengler
Oswald Spengler's picture

It looks like this is just a liquidity goose to excite the markets post MF Global. I sold my silver to square some legal bills, but I'll be borrowing from my brother in law to squeeze out some paper profits and convert them to physical. Tahe my advise homies, don't smack your bitches, even when they deserve it. The slammer sucks.

Sun, 11/06/2011 - 00:10 | Link to Comment Bear
Bear's picture

Deserve it? When does anyone ever deserve to be 'smacked'?

Sun, 11/06/2011 - 01:34 | Link to Comment Dave
Dave's picture

You obviously weren't raised in Texas.

Sat, 11/05/2011 - 20:27 | Link to Comment JPM Hater001
JPM Hater001's picture

Can we all agree not to fight this thread?

Sat, 11/05/2011 - 20:43 | Link to Comment greased up deaf guy
greased up deaf guy's picture

this is fight club. it's what we do.

Sat, 11/05/2011 - 21:45 | Link to Comment erg
erg's picture

It's not healthy to hold things in. Sometimes you just want to take a haymaker at something. We suffer each other in this regard.

Sat, 11/05/2011 - 20:35 | Link to Comment Atomizer
Atomizer's picture

Back in the day, CME was borrowing MF Global client funds to raise the margins via JPM. Silver shell games exposure. LOL

Sat, 11/05/2011 - 21:05 | Link to Comment bahaar
bahaar's picture

How does lowering initial margin help MF ex-clients (or rather ex-MF clients)?  I thought they were supposed to post maintenance margin since that's what gone missing???

Sat, 11/05/2011 - 21:13 | Link to Comment Kina
Kina's picture

The Titanic needs more passengers. All aboard, this is the last stop, before the big-one.

Sat, 11/05/2011 - 21:13 | Link to Comment bugs_
bugs_'s picture

all these big shots expecting some kind of big shock it seems - keep eyes and ears peeled

Sat, 11/05/2011 - 21:15 | Link to Comment Kina
Kina's picture

If you compare the ICE release to that of the CME you have to wonder if the CME deliberately issued its release to imply the opposite meaning to its real intention. These people cannot be that stupid, surely.

Sat, 11/05/2011 - 21:25 | Link to Comment sabra1
sabra1's picture

so, this is like the opposite of naked short selling?

Sat, 11/05/2011 - 21:30 | Link to Comment anynonmous
anynonmous's picture

Sat, 11/05/2011 - 21:50 | Link to Comment Schmuck Raker
Schmuck Raker's picture

I can't disagree.

Sat, 11/05/2011 - 22:13 | Link to Comment gwar5
gwar5's picture

I gave you a thumbs up. It's the thought that counts.

 

Sat, 11/05/2011 - 22:26 | Link to Comment tickhound
tickhound's picture

One of your better posts.

Sat, 11/05/2011 - 22:42 | Link to Comment Unprepared
Unprepared's picture

White stands for confusion.

Sat, 11/05/2011 - 23:06 | Link to Comment tickhound
tickhound's picture

Sadly, I confused him for someone else and actually wish I could retract. 

I'll junk myself, once again, in the name of proper self-governance.

Sat, 11/05/2011 - 22:39 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

.

Sun, 11/06/2011 - 05:37 | Link to Comment Monedas
Monedas's picture

I gave you thumbs down for poor syntax and lack of punctuation ! Monedas 2011 Comedy Jihad Obama/OJ Simpson Jury Axis of Stupidity

Sat, 11/05/2011 - 21:32 | Link to Comment Ted K
Ted K's picture

it's roughly 9:30 pm eastern time.  My twitter is all fucked up.  Anyone else having probs with the Twitter interface this Saturday evening??? (Let's skip the social jokes please)

Sat, 11/05/2011 - 21:39 | Link to Comment Lord Welligton
Lord Welligton's picture

This action is being taken to mute the impact of the transfer of accounts from MF Global Inc. to other clearing members that was effected overnight, and thereby support the integrity of Exchange markets.

There is a Big Big Big problem here.

Sat, 11/05/2011 - 22:14 | Link to Comment JesusUp
JesusUp's picture

they are not the only MF'ers out there

Sat, 11/05/2011 - 22:08 | Link to Comment RobotTrader
RobotTrader's picture

Like I said.

We should be down lock limit on Monday, based on all the dire predictions reported here day in, day out.

If that happens, then gold will go down 2x faster than everything else, and gold stocks will go down 3x faster.

If nothing bad happens, then ES will start climbing again with deep cyclicals (X) and junker financials (GNW) going up the fastest and the broad tape will reluctantly drag gold and the XAU along with it.

We'll see on Monday if the rabid short sellers and doom sayers on this site are heroes or goats.

Sat, 11/05/2011 - 22:30 | Link to Comment CompassionateFascist
CompassionateFascist's picture

RT, you are going to be right...until you are wrong. And then, you are going to be permanently wrong.

Sat, 11/05/2011 - 22:38 | Link to Comment Unprepared
Unprepared's picture

"We'll see on Monday if the rabid short sellers and doom sayers on this site are heroes or goats."

 

And either way, you'll say I told you so?

Sun, 11/06/2011 - 00:07 | Link to Comment Bear
Bear's picture

If liquidations are forced in the MF BK (interesting new symbol MFBK) then gold should drop. If Greece is front and center then it should go up.

Sat, 11/05/2011 - 22:10 | Link to Comment gwar5
gwar5's picture

@KWN

Andrew McGuire (of the clan McGuire), silver whistleblower, sticks up for Chilton and Gensler at CFTC. Says they are trying hard but are getting blocked by JPM and CME. Says they are blocking extra staffing to perform compliance with Frank-Dodd.  JPM: "...But you don't need extra staffing because we already have 350 people working on it."


 

Sun, 11/06/2011 - 12:12 | Link to Comment disabledvet
disabledvet's picture

Can't wait for Gensler to become a regular at ZH!
http://www.youtube.com/watch?v=hpiIWMWWVco&feature=player_detailpage

Sat, 11/05/2011 - 22:11 | Link to Comment Stonecold
Stonecold's picture

They need to lower maintence margin to avoid margin call.  Why would they lower initial margin?  Do they know how to trade futures?   If they lower initial margin people can put on bets against these now known positions.  The new holder of the account knows the position.  Do they want to destroy these traders?

Sat, 11/05/2011 - 22:18 | Link to Comment dust to dust
dust to dust's picture

 Low, low low is the bottom. When is the bottom? Enough. 1ST Q, 2nd Q 2012. HOLD PM'S.

Sat, 11/05/2011 - 22:22 | Link to Comment LookingWithAmazement
LookingWithAmazement's picture

So, PM prices gonna explode upwards?

Sat, 11/05/2011 - 22:35 | Link to Comment pleseus
pleseus's picture

I hope so. Opps. There I go again using hope as my investing impetus.

Sat, 11/05/2011 - 22:25 | Link to Comment earleflorida
earleflorida's picture

were in a space/time continuum where  gravity's police-state has been fractured  by the implosion of the massive 'cme-star', aligning in sub-orbit with its dwarf  'ice-star', creating a gargantuan "black-hole event horizon", where the entire  financial universe is now in a perpetual  time warp, caught between reality and the laws of inescapable human-nature - 

so what happens next is really nothing more than a,... 'matter' of fact!

Sun, 11/06/2011 - 01:37 | Link to Comment Cast Iron Skillet
Cast Iron Skillet's picture

we're close to the event horizon ...

Sat, 11/05/2011 - 23:00 | Link to Comment Joe Ploppy
Joe Ploppy's picture

In answer to the  question "is the liquidity that low" the answer is obviously YES!

But there is naunce.  Unlike the equity markets where the short to long ratio is often in the ball park of 1 to 9, in the futures market it is close to 1 to 1.

There is also pressure to liquidate accounts otherwise a lot of contracts will be subject to taking or making delivery of actual commodities. Not good!  The CME, the ICE wants to make sure that every player that had no intention of making or taking delivery gets the heck out of the market and squares out their position or rolls out their contracts to later delivery dates....  Otherwise there will be needless carnage merely because the willing long players can't get matched up to willing short players.

This temporary relaxation may end up being a good thing if really what is happening is getting a lot of the longs to square up with the shorts.  Also, the futures market is not the same as the physical market, and it can't get too far out of step with the physical market because of arbitrage. 

If this relaxing of margin is temporary, it could be a good thing. What would be bad is if it stays in place.  The CME is like a big casino hosting a poker game.  As long as the players are able to pay each other what they are due, the CME is happy.  Lowering margin rates long term raises the risk players will not pay each other when they lose on their wagers.  But if the relaxation of margin will be in effect just to clear out the MF problem in the current delivery cycle, then it could be a good thing, provided the CME, the ICE etc re-raise the margin rates ASAP.

But here is another problem: The MF clients may liquidate their futures position, but where the heck is their cash!

For example, say I put $100,000 in an MF account. I had been long Crude Oil at 93. Now crude is at 94. I may have to liquidate my futures position even at a profit, but what will happen to the cash I deposited? Will I get it back? Maybe if the SIPC (the analogue of the FDIC) helps.....

60% of the clients are getting their MF accounts transferred, and as long as the cash goes with it, I'm sure lots of brokers would be happy to receive them.  The problem is the poor MF clients who are forced into a margin call, or otherwise forced to liquidate a position (because of the threat of delivery), and simultaneously have little hope of getting their cash back anytime soon!  I suspect the lowering of margin requirments is to provide liquidity for the poors souls to liquidate their positions even with the knowledge they might not get any of the cash they own any time soon if ever.

Btw, here is a letter I got from my ex-broker who had my futures account with MF:

 

"Dear Futures Customer,

We are closely assessing the situation surrounding MF Global’s parent company filing for Chapter 11 bankruptcy protection and as of now, futures exchanges have determined that all customers of MF Global are limited to Liquidations Only closing transactions. Should you need to close a position please call E*TRADE at 1-877-553-8887.

Please be aware that E*TRADE Securities is establishing a new introducing relationship for futures customers with R.J. O’Brien & Associates, LLC (RJO). If you wish to enter new futures trades, your only option is to open and fund a new futures account through us with RJO. E*TRADE is also working to transfer your current MF Global account to RJO, however the timing of any such transfers remains uncertain.

We will continue to monitor the MF Global situation and inform you of significant news about your account as we receive it.

Should you have questions about your account, please call E*TRADE at 1-877-553-8887.

"

In other words:  "Dear Etrade client...you're screwed, thanks for your business. ha ha"

 

 

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