Reuters: Shanghai Gold Exchange Lifts Margins for Gold Forwards

August 23rd, 2011 by

* SGE lifts trading margins for gold forwards to 12 pct

* Daily trading limits lifted to 9 pct, from 7 pct

* SGE says monitoring silver, may act to limit volatility (Adds details, background)

SHANGHAI, Aug 23 (Reuters) – The Shanghai Gold Exchange (SGE) said on Tuesday that it will raise trading margins on three gold spot-deferred contracts to 12 percent from 11 percent from Aug. 26 to limit trading risks following recent wild price swings.

It would also widen daily trading limits for those contracts to 9 percent, up from 7 percent, the SGE said on its website. The contracts to be affected include Au(T+D) , Au(T+N1) and Au(T+N2) .

The SGE said it was closely eyeing silver contract price movements and would consider raising trading margins, transaction fees or costs of rolling over forward contracts should volatility persist.

This is the second time the SGE has raised collateral requirements on gold forward contracts this year — both times took place in August — as international gold prices hit a series of news highs over the past few weeks, boosted by a flight to safety on worries over stalling U.S. recovery and crippling sovereign debt in the euro zone.

The SGE’s move also comes just two weeks after CME Group Inc upped margins on its gold futures by a whopping 22 percent on Aug. 11 — the biggest rise since Feb 2010, reflecting growing concern among exchanges around the world that the metal’s bull-run could be spurring traders to take excessive risks.

Spot gold soared to an all-time high above $1,910 on Tuesday, on course for its biggest monthly rise in 29 years, as persistent worries about global economic growth burnished bullion’s safe-haven appeal.

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