CME raises gold, silver margins after historic price plunge

CME Group is raising margins on Comex gold and silver futures after prices suffered their biggest slides in decades.

Gold margins will rise to 8% of the value of the underlying contract from the current 6% for non-heightened risk profile, the exchange said in a statement Friday. The heightened risk profile margins will be increased to 8.8% from the current 6.6%, it said.

Silver margins will climb to 15% from the current 11% for non-heightened risk profile, while the heightened risk profile margins will be hiked to 16.5% from the current 12.1%, according to the statement. Platinum and palladium futures’ margin also will be boosted.

The change takes effect from Monday’s close and follows a “normal review of market volatility to ensure adequate collateral coverage,” it said.

The increase means those who want to trade futures of gold, silver, platinum and palladium will need to put up more collateral to ensure they can meet their obligations. While the exchange routinely raises margins when a contract is soaring, sliding or extremely volatile, Friday’s move could further edge out smaller players who don’t have enough cash to make the necessary deposits.

Earlier this week, the exchange hiked margins for silver, platinum and palladium futures following price surges.

(By Yvonne Yue Li)