CME Increases Margin Requirements on Nikkei 225 Index Futures

The Chicago Mercantile Exchange Inc. is raising the margin requirements for speculators in Japanese stock futures after prices fell the most in two years.

The initial margin for Nikkei 225 Stock Average futures will rise 33 percent to $3,300 per contract at the close of trading tomorrow, Chicago-based CME Group Inc. said in a statement. Initial margin is the minimum amount of cash or eligible securities investors must deposit to cover the risk of default.

About $314 billion was erased from Japanese market value today when the Nikkei 225 tumbled 7.3 percent, the most since March 2011, after a 50 percent surge this year on speculation that Prime Minister Shinzo Abe and the Bank of Japan would end two decades of deflation. For the first time since April 2005 every company in the Nikkei 225 fell.

Nikkei 225 futures traded in Osaka were up 0.1 percent in the May 24 session as of 7:46 a.m. Tokyo time.

The stocks fell as factory output in China shrank for the first time in seven months, a report from HSBC Holdings Plc and Markit Economics showed. Federal Reserve Chairman Ben S. Bernanke told lawmakers yesterday a premature withdrawal of stimulus could endanger economic recovery as policy makers debated tapering the pace of bond purchases.

To contact the reporter on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.