You know, ever time we’ve gotten a huge equity bubble, the SEC has raised margin requirements for stocks. In the 1920’s, you could buy stocks on margin the way you buy futures today - on about a 10:1 leverage.
After the ‘29 crash, the margin requirements were raised significantly.
After the dot-bomb bubble imploded, the SEC (and brokers) raised the margin requirements on small, speculative stocks of companies with short trading histories. Now, it is the practice of my broker that they won’t allow you to buy stocks in thinly-traded companies with short listing histories without 100% cash to do so; ie, no margin loan on these stocks at all. Even on big, stable companies, I can get only 50% margin loans (ie, if I own $100K of IBM, my margin based on that position is $50K buying power).
There’s no reason why we shouldn’t raise margin requirements for futures. The people the commodities markets were originally meant to serve (ie, farmers and buyers of farm commodities) are being washed out of their hedge positions by the increasing margin requirements that are brought on by the rapid rise in the price of commodities outside supply/demand fundamentals.
Right, and they've been ooohhh so effective./sarcasm
Theres no reason why we shouldnt raise margin requirements for futures.
No reason, other than it won't work.