CME raises silver margins as prices smash records in wild rally

CME Group is raising margins on Comex silver futures after prices surged to a record high this week.

Margins will rise to 11% of so-called notional from the current 9% for non-heightened risk profile, the exchange said in a statement on Tuesday. The heightened risk profile margins will be raised to 12.1% from the current 9.9%, it said. Platinum and palladium futures’ margin also will be hiked.

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

Earlier this month, CME changed the outright margin setting on precious metals futures to a percentage of so-called notional from a system based on dollar amounts.

The increase means those who want to trade futures of 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 or extremely volatile, Tuesday’s move could edge out smaller players who don’t have enough cash to make the necessary deposits.

(By Yvonne Yue Li)