CME Group Raises Margins For Crude, Fuels Due To Volatility

NEW YORK (Dow Jones)–Exchange operator CME Group Inc. (CME) is raising margin requirements for the second time in a week for its crude and fuels contracts, citing market volatility.

The higher margins take effect at the close of trading Friday, spokesman Chris Grams said. The CME revises its margin requirements and often raises them during times of increased volatility, which brings additional risk for traders, he said.

For West Texas Intermediate crude on the New York Mercantile Exchange, CME is raising initial margin requirements, or the deposit required to purchase a contract, for speculators to $6,775 per contract, up from $6,075. Maintenance margin requirements, or the additional deposit required for keeping a contract overnight, increase to $5,000 from $4,500.

For hedgers and exchange members, both the initial and maintenance margin requirements will increase to $5,000 per contract from $4,500. CME is also raising initial and maintenance margins on heating oil and gasoline futures.

The last time CME raised margin requirements was Feb. 24. Energy prices and volatility have risen sharply the last two weeks due to disruptions to oil supplies caused by violence in Libya. April crude on the Nymex was trading up $2.38, or 2.4%, at $104.39 a barrel.

-By Dan Strumpf, Dow Jones Newswires; 212-416-2818; dan.strumpf@dowjones.com.

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