* CME raises crude margins fourth time since February
* Volatility leads to 67 pct hike in margins since Feb
* Some traders say oil price down on higher margin call
(Adds context on increase, exchange figures)
May 9 CME Group Inc , the world's largest
commodities exchange, raised the margin call for crude futures
for the fourth time since February as price volatility soars.
Margins will climb by 25 percent as of the close of business
on May 10, boosting the cost of holding positions for hedgers
and speculators, a factor some traders said helped bring oil
prices down by as much as 2 percent on Tuesday following a $5 a
barrel spike a day earlier.
In a two-step hike over six trading sessions in late
February and early March, CME Group had already raised the
margins on U.S. crude by a cumulative 33 percent, increasing
them again on April 15. The higher margin requirements were
linked to increased volatility as civil war broke out in Libya,
cutting the country's crude exports.
The cumulative increase in margins on U.S. crude benchmark
West Texas Intermediate CLc1 positions since February is 67
percent, from $3,750 to $6,250 per contract.
Initial margins started 2009 at more than $9,000 per
contract, after prices slumped from records near $150 a year
earlier to less than $40 a barrel, and then shrank over the
course of the year as volatility decreased. They are now at
The latest move comes after a frenzied week of oil trading
that saw U.S. crude prices fall from over $114 a barrel -- the
highest level since 2008 -- to $94 a barrel.
That drop was part of a wider commodities sell-off last
week, spurred in part by margin increases of 84 percent in
silver over the past two weeks.
To view CME's announcement on the complete list of margin
requirement changes: link.reuters.com/fer49r
U.S. crude prices, which rebounded from last week's rout to
settle up $5.37 at $102.55 a barrel on Monday, traded down
following news of the margin increase, falling $1.37 to $114.53
a barrel at 0307 GMT.
CME, parent of the Chicago Board of Trade, said on its
website that it had hiked margins for crude oil futures on the
New York Mercantile Exchange by $1,250 per contract. With open
interest in the contract topping 1.65 million lots last week,
that would amount to an over $2 billion increase in total.
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
Margins can be used as a tool to curb speculative trading
activity, particularly "hot money," by reducing the number of
positions a party can hold leveraging a particular amount of
CME also increased Brent financial futures margins by 23.8
percent, while RBOB gasoline RBc1 margins were hiked by 21.7
The amounts are in U.S. dollars per contract for
Commodity Initial/Maintenance Initial/Maintenance
Brent financial futures $7,088 / $5,250 $8,775 / $6,500
WTI financial futures $6,750 / $5,000 $8,438 / $6,250
Heating oil futures $6,413 / $4,750 $8,438 / $6,250
RBOB Gasoline futures $7,763 / $5,750 $9,450 / $7,000
Crude oil future NYMEX $6,750 / $5,000 $8,438 / $6,250
(Reporting by Naveed Anjum in Bangalore, Matthew Robinson in
New York and Alejandro Barbajosa in Singapore;
Editing by Richard Chang and Michael Urquhart)