Goldman Requires 100% Margin on Some Bitcoin Futures Trades
$BTCUSD, $GS, $CBOE, $CME
Goldman Sachs Group (NYSE:GS) has demanded some clients set aside funds equal to the full value of their Bitcoin futures trade as a condition for clearing the transaction, aka 100% margin.
The demands deterred some clients from seeking to clear trades through the Wall Street bank and led them to take their business elsewhere.
The guidelines are higher than Options Clearing Corp.’s 44%, required to clear contracts traded on the Cboe Global Markets Inc.(NASDAQ:CBOE), and the 47% to be demanded by CME Group Inc (NASDAQ:CME). when it begins trading Bitcoin futures on 18 December.
“Margin decisions are based on multiple factors and vary on a case-by-case basis,” a spokeswoman for New York-based Goldman Sachs, said in a statement.
The bank is 1 of a few that have cleared the trades since the Cboe began offering futures contracts earlier this week.
Bitcoin’s volatility spurred many large banks to hold off on clearing trades. Options Clearing and CME raised their margin requirements amid wild price swings in the market.
It is not uncommon for a brokerage to impose steeper requirements than the exchange.
Goldman’s guideline means that clients will not enjoy any leverage on Long positions and will face onerous terms if they use the futures to bet on a decline in the price.
A margin requirement is how much investors must set aside so that other parties in the trade know any losses can be covered.
The guidelines for Bitcoin futures are several times that of commodities such as Gold and Crude Oil.
CME Group and Cboe declined to comment.
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