Shanghai hikes silver margins to fresh high

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By Chris Oliver, MarketWatch

HONG KONG (MarketWatch) — China’s leading market for precious metals trading increased its silver margin requirements Friday to a fresh high amid heightened volatility in precious metals.

The Shanghai Gold Exchange lifted silver margin requirements to 18% of a contract’s value, up from 15% previously, according to data provided by ScotiaMocca, the metals unit of Scotia Capital.

It’s not clear when the new margin requirements come into effect, but a report by Reuters said it would likely be from Monday.

Reuters also reported that the margins would change further if price swings breach daily trade limits on Friday.

Brokers said the margin changes would affect Shanghai retail investors who have margin trading accounts.

“It is extraordinarily high — it’s higher than most other exchanges,” said ScotiaMocatta managing director Sunil Kashyap in Hong Kong, referring to the new margin requirements.

He said the hikes appeared intended to prevent sharp losses among small traders.

“It’s a continuing reaction to the problems that took place earlier this year in May and April and when there was extreme volatility in silver,” said Kashyap. “The exchange is a little bit skittish that we may have further volatility.”