Friday, November 4, 2011

Mother of All Margin Calls Coming: CME Hikes Maintenance Margins to Initial Margins for ALL PRODUCTS

This is not a PM raid folks, this is a MARGIN CALL for ALL PRODUCTS!  
As maintenance margins are 20-30% below initial margins, this is effectively a 20% + margin hike for holders of ANY maintenance position.
It's suddenly starting to look like MF Global IS the next Lehman Brothers.
As the margin hike is effective end of business Friday 11/4, this means those whose accounts are not already funded enough to withstand 20-30% margin hikes are ALREADY ON CALL going into the Sunday night open- giving brokerage firms the right to liquidate underfunded positions immediately upon market open Sunday night.  Think this doesn't have anything to do with the 50,000 MF Global accounts that were due to be liquidated after Friday's close barring another firm accepting the transfer of the accounts?
Furthermore, the MF Global accounts' cash positions were frozen- meaning that even the accounts that were able to be transferred will meet an immediate margin call Sunday night/Monday morning unless they can wire the additional cash necessary to meet the new requirements.

It appears to be time for one of the infamous weekend pow-wows for the Fed/Treasury...will we be looking at a Black Monday in 72 hours???

From the CME:

Full CME Catalog