Soaring Financial Vol Leads CME To Announce A 33% Margin...Cut
Because while soaring volatility in gold and copper, not to mention silver, results in one after another margin hike to "cool off the speculators", when it comes to financial stocks, especially in the "tail wag the dog" variety where the synthetic drives the stock price, a surge in vol means a cut in margins, or 33% to be precise. As of minutes ago, the biggest futures exchange just cut XAF margins by a whopping 33%, exploding vol be damned, or actually, because of it. The CME would be even more delighted if clients were to pledge their gold as collateral, especially following yesterday's expansion of gold's marginability from $200 to $500 million. So just in case anyone missed the message from today, when fins plunged then soared on a rumor, the CME would be delighted if you could repeat all of that but this time with 23% more margin. Expect more margins cuts, this time in ES offset by margins hike in all other instruments, especially of the public enemy #1 variety such as precious metals and crude.
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