Brokers impose higher margins, restrictions on oil futures trading

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SEVERAL brokerages have put in speed bumps on oil futures trading by raising margin requirements or imposing restrictions, especially on near-term contracts, in a bid to safeguard clients as oil markets experienced unprecedented volatility. Read more at The Business Times.

June contracts are in the cross-hairs of brokers because these are now the next to expire. Trading of contracts for May delivery or settlement had stopped in late April.

The ban by Phillip Futures is the latest in a series of progressive measures it has taken since March, when the world's two largest producers, Saudi Arabia and Russia, became embroiled in a duel over output cuts. Brent prices had tumbled to below US$30 a barrel and have continued to trend down since.

Over at OCBC Securities, the margin of expiring spot month contracts has been raised to twice that of the exchange-required margins since April 27. Another policy that has been in place since March is to engage clients with low equity on Thursday, so that they can top up their margins and their funds can reach OCBC Securities by Friday. This is to buffer for any economic shocks and news that may occur over the weekend."As such, when oil prices crashed last week, OSPL remained sheltered," he said.

 

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