Exchange risks refer for the transfers where gold and futures are traded, and not to currency risks. The two major gold futures transfers would be the fresh York Mercantile Exchange (NYMEX) plus the Tokyo Commodity Exchange (TOCOM). Trading at these and all other exchanges is subject for their policies and regulations. The transfers can on purpose or accidentally foster industry effects via switching their trading policies.
1.
Margin Requirement Change: A margin requirement states how much cash requires to be available in the futures account in order to speculate on future contracts. The higher the margin requirement, the harder income is needed to manage the same quantity of the underlying asset. once the margin through the margin account is within the margin requirement, then the investor either has to improve the margin, or sell securities. Thus, rising the margin will in average result in more selling and as a consequence in price droppings.
In December 2009, COMEX raised the margin requirements for gold (and silver) contracts. It was speculated that this enhance would impact in a bearish future gold market for three to six months.
2.
Liquidation only: This rare event means that the exchange temporarily restricts buying, so that only selling can happen thus driving the prices down. COMEX restricted silver buying in 1980, when this chromium steel reached an all-time high of US$ 50. Will the exchange also declare a “liquidation-only” policy on gold, which in addition trades for a recording price?
3.
Halt trading: This situation is the most high measure. Here, an exchange temporarily halts the trading of a particular future contract.
Originally written
here
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