Second, ''margin'', in the world of futures, is a performance bond put up by the trader as a guaranty of performance on the contract, and a guaranty that he will be responsible for any trading losses. These dolts (Sen. Bunghole Bingamen, to name one) who are calling for gigantic margin requirement increases on the order of tenfold, are off on some other planet. Name me an instance, ANY instance, of a 50-60-70% performance bond on ANY contract on this planet.
Third, in futures mkts there is NO borrowing by anybody from anybody, except sometimes in the case of physical delivery (the brokerage will lend the client the capital to pay for the goods, on the condition that he sell them back into the spot mkt immediately).
Other than those points, your cited source may have a clue as to what he's talking about.
The figure cited was 6.0 %. It was cited by the author from an earlier article the author wrote. Do not know when that article was written.
Third, in futures mkts there is NO borrowing by anybody from anybody, except sometimes in the case of physical delivery (the brokerage will lend the client the capital to pay for the goods, on the condition that he sell them back into the spot mkt immediately).
Perhaps borrow was a poor choice of words by the author. As you stated, Guaranty is much better. That could be a simple England verse States problem. For Example - They refer to rent as let over there.
Other than those points, your cited source may have a clue as to what he's talking about.
Well he is from England. You can post comments to his article if you like.
“in futures mkts there is NO borrowing by anybody from anybody”...
With the margin you cite there has been an increase in the cash working capital requirement of the futures market in propertion to the increase in value of the commodity.