CME changes margin req to INITIAL = MAINTENANCE !?!?!?

I think this is nothing more than the CME trying to forestall conversations about the right margin requirements for transferred MF positions: initial or maintenance. A lot of the new FCMs are nervous, so they want initial.

No big deal. No big players (oufside of MF accounts) are close to breaching margin anyways. This should be a non-event for non-MF accounts.
 
Quote from trendy:

You just don't get it. The initial margin is not changing. Its only the maintenance margin, which only applies to the end of day settlement price of the contract. If you are not holding a position at the end of day, then maintenance margin, whatever it may be is irrelevant.
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If I am a futures day trader, and I no longer have the buffer of margin between initial and maintenance, then I have to have additional cash in my account to act as the buffer on any drawdown.

If I am a futures day trader, and initial margin of a contract is $4,000, then I can lose $1,500 on the trade since maintenance margin is normally $2,500. If maintenance margin is now also $4,000 (same as initial margin), then a margin call will trigger immediately on any drawdown. I now have to make sure I have more cash in my account for each contract so that this does not happen.

If I am a futures day trader, this would effect me.

Anyways, this is besides the point.

Question is, is this communique as market moving as it may seem at first glance?
 
Quote from DisciplinedHedg:

If I am a futures day trader, and I no longer have the buffer of margin between initial and maintenance, then I have to have additional cash in my account to act as the buffer on any drawdown.

If I am a futures day trader, and initial margin of a contract is $4,000, then I can lose $1,500 on the trade since maintenance margin is normally $2,500. If maintenance margin is now also $4,000 (same as initial margin), then a margin call will trigger immediately on any drawdown. I now have to make sure I have more cash in my account for each contract so that this does not happen.

If I am a futures day trader, this would effect me.

Anyways, this is besides the point.

Question is, is this communique as market moving as it may seem at first glance?
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Once again, you still don't get it. As a day trader you don't need a "buffer" as you call it between initial and maintenance, because maintenance margin only applies to held positions at the end of day. Now, your broker as an element of risk management, may have a daily $ loss limit that it applies to your account, or may require your account to keep a certain margin during the trading day, but this is not the CME maintenance margin.
 
It's amazing how trendy does not know how to read. We ARE NOT TALKING ABOUT DAYTRADING FUTURES. The change in margin affects other participants who are not daytrading future, and the maintenance requirement DOES affect them. This is NOT about you nor is it about the ability to enter positions intraday. This does NOT affect intraday position, and thus we are not talking about daytrading.
 
Quote from thirst:

It's amazing how trendy does not know how to read. We ARE NOT TALKING ABOUT DAYTRADING FUTURES. The change in margin affects other participants who are not daytrading future, and the maintenance requirement DOES affect them. This is NOT about you nor is it about the ability to enter positions intraday. This does NOT affect intraday position, and thus we are not talking about daytrading.
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It is you who cannot read. I pointed all of this out in my first post to this thread. Oh, and by the way, you have provided ZERO analysis to the issue thus far. Keep up the good work.
 
The OP came to ask for opinions on how this might affect the overall market. I have no clue. But you are nonsensically attacking the OP when the question at hand is not centered around daytrading futures. While you are correct in stating that it wouldn't affect intraday trading because intraday margins are so low when compared to maintenance or initial margin, it still doesn't answer the question as to how the market might respond to this change.

Forget it... I remember wasting time on people who talk down to others.
 
Quote from KageRyu:

So do we expect a massive drop as brokerages liquidate positions?
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A massive drop of what?

Futures traders play both sides of the market.

Liquidating shorts isn't going to make any futures market drop.
 
Trendy - I do get what you are saying now. What I was implying was that CME changes will cause brokers like IB to change their maintenance margins as well. That WILL in turn affect how intraday futures daytraders trade - either they will trade less contracts or have to deposit more cash into accounts. Or maybe I still don't understand...

Thirst - And yes, you are correct, my original post was to try to get some clarification as to how this is going to affect the markets once they reopen Sunday.
 
Quote from thirst:

The OP came to ask for opinions on how this might affect the overall market. I have no clue. But you are nonsensically attacking the OP when the question at hand is not centered around daytrading futures. While you are correct in stating that it wouldn't affect intraday trading because intraday margins are so low when compared to maintenance or initial margin, it still doesn't answer the question as to how the market might respond to this change.

Forget it... I remember wasting time on people who talk down to others.
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Apparently you do want to waste time, you wrote the post right? So, fine, let's continue. I made one simple post, and was told incorrectly by the OP that I was wrong. I tried to point out to the OP, that in fact, he was wrong. Unable to realize that he was indeed wrong, he proceeded to again tell me I'm wrong. I corrected him again. I certainly did not attack the OP any more than he attacked me by saying I was wrong.

Now, as to the issue at hand. Jeb9999 made a good point. Those swing traders short the ES are probably going to face a bigger margin call than those who have been long considering market direction over the last several weeks. To close out their short positions on any margin calls, the shorts are going to have to buy contracts. That's of course, bullish. The longs have seen their account balances increase over this time, thus mitigating the impact of any margin calls.
 
Quote from DisciplinedHedg:

No effect on day trading futures?

Wrong. Brokerages (ie. IB) can auto-liquidate you intraday anytime you don't meet margin requirements. They don't have to wait until settlement.
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Based on the IB Website this would seem to be correct:

IB Real-Time Margining

Interactive Brokers uses real-time margining to allow you to see your trading risk at any moment of the day. Our real-time margin system applies maintenance margin requirements throughout the day to new trades and trades already on the books and enforces initial margin requirements at the end of the day, with real-time liquidation of positions instead of delayed margin calls. This system allows us to maintain our low commissions because we do not have to spread the cost of credit losses to customers in the form of higher costs.
 
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