Accepting gold as collateral means that those unable to meet margin calls will see their physical gold bullion liquidated to the CME rather than their cash.
Somebody's thirsty for phyzz.....
NEW YORK, Oct 3 (Reuters) - CME Group Inc (CME.O), the biggest operator of U.S. futures exchanges, said it will more than double the amount of physical gold it can accept from its clearing members as collateral.
CME Group said in a statement dated Friday that it would increase the amount of bullion its customers can post as collateral to $500 million from $200 million, effective Monday.
The Chicago-based company said that the change will allow market participants to better manage their risk and to take advantage of lower gold lease rates.
"I think that it really shows that people in the gold market want to use gold more efficiently," Harriet Hunnable, CME Group's managing director of metals products, told Reuters.
She said that more exchange customers are using gold as collateral but declined to disclose how much bullion the exchange currently held.