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Stocks & Commodities V. 33:11 (41): Futures For You by Carley Garner

Stocks & Commodities V. 33:11 (41): Futures For You by Carley Garner

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Futures For You by Carley Garner

THE RISE OF THE MARGIN

Is a brokerage firm justified in increasing daytrading margin rates during higher volatility?

Yes, daytrading margin is set at the bro-kerage level rather than at the exchange level. In other words, although futures exchanges such as the CME Group and the Intercontinental Exchange declare minimum margin rates for positions held overnight, it is the brokerage firm, or even the individual broker, that determines the margin rates required for traders to enter positions that will be offset prior to the same days close.

Daytrading margins can be set at levels substantially below the exchanges minimum overnight rate. For instance, at the time of this writing, the CME charged $5,060 in margin to initiate an emini S&P 500 futures contract intended to be held overnight...
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