Tuesday, October 20, 2009

Chicago Exchange to Accept Gold as Collateral for Margin Requirements

In a surprising move, the Chicago Mercantile Exchange announce that it will accept physical gold as collateral for margin requirements. This was unthinkable not too long ago.

Now the gold will have to be stored at JPMorgan in London! Conspiracy theorists are already saying JPM is desperate for gold.

Here is the Nasdaq PR:

"U.S.-based clearing house CME Group Inc. (CME) will allow physical gold to be used as collateral for margin requirements on all exchange products, a spokesman said Monday.
The new global policy is effective Oct. 19 in accordance with a member's notice issued late Friday, said spokesman Jeremy Hughes in London.
Clearing member firms will be allowed to post up to a maximum of $200 million worth of gold as collateral to cover performance bond, or margin, requirements, Hughes said.
The policy was a byproduct of CME's recent launch of clearing services for over-the-counter London gold spot and forward contracts, he said.
"Many of the [trading] houses hold quite a lot of physical gold and would welcome using it more efficiently," he said.
The gold will be held at J.P. Morgan Chase & Co.'s (JPM) bank in London. "

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