Re: Friday's steep drop in oil prices
<<Speculators are already held to the higher margin requirements, and have been for a long time. Speculators are unaffected by this margin change.>>
I don't understand your point. The original article said:
<< IntercontinentalExchange Inc said it has received a 90-day reprieve from regulators for implementing controversial changes to non-hedge initial margins required under new federal legislation... There is no change for positions that qualify as hedging. Those market participants will be able to continue paying the lower hedge margin..>>
Which I interpret as meaning that the new higher margins were to apply to speculators as opposed to legitimate hedgers.
<<You never see speculators blamed for oil prices being too low, stock prices being too high or the dollar too high relative to other currencies.>>
I blame speculators for nasdaq prices being too high in 2000, for silver prices exploding when Hunt cornered the market and for tulip prices exploding during the tulip mania. Many people have wondered if speculation affects energy prices much. Energy demand seems to change by + and - 5% and energy prices seem to change by + and - 50%.
In re-reading the article I do see that the proposed margin increases were intended to apply to both ICE and CME, which I missed the first time I read it, so my comment about ICE being one small exchange was mistaken. |
