Commodities slumped across the board today. Most market watchers are saying that aid for the mortgage markets encouraged some investors to move money from commodities to bonds. But commodities traders had more on their minds than bonds today, as rumors of additional margin requirements made their way across trading desks via instant messaging and phone lines.
What sparked concern was a rumor that the futures exchanges or regulators—or maybe both—were considering raising margin requirements for “non commercial” commodities traders—especially non-com energy traders. Non-commercial traders speculate on the price of commodities but do not ever take delivery of the commodities. Amaranth was a non-commercial trader, while Exxon-Mobil is a commercial trader.
The Commodity Futures Trading Commission, which is charged with overseeing trading in futures contracts, does not set margin requirements. This responsibility falls on the exchanges, such as NYMEX and the CME, which are viewed as having a better, ground-level view of the market’s volatility and risks. Spokespeople for the CFTC said they had no plans to begin regulating margin requirements.
A move to increase the margin requirements for non-com traders could be aimed at diminishing price-volatility, and might reduce commodity prices. This, in turn, might be viewed as aiding a faster recovery as investment dollars would be re-directed at areas of the economy that fuel growth. What’s more, it might tamper—or at least obscure—inflation fears by reducing prices in things like oil and gold.
The exchanges rarely distinguish between commercial and non-commercial traders, however. Market watchers DealBreaker contacted were skeptical that they would put in place such a distinction now. One economist also said that the move could actually fuel volatility, at least in the short term, by obscuring efficiency-creating arbitrage in the markets.

A last minute change in a software industry group’s meeting has raised questions about whether famed and infamous tech stock analyst and 
Blind hedge fund guessing game: Which multi-billion dollar multi-strat hedge fund manager, located far from Wall Street and Greenwich, is rumored to be “blowing out” its arbitrage positions this morning as all eyes are focused elsewhere this morning? What prompted the selling-off is unclear, but it has tongues wagging.
Today might not only be one of the most violently volatile days on the market. It’s also one of the most rumor swept. We’re hearing more rumors with more names attached than anyone could possibly check or even keep up with. We threw some of the most talked about hedge fund names at you earlier, and so far a few people in the know have helped us cross some names off our list. But there are more names out there.
Unprecedented volatility and record trading volume is one sign of capital markets gone wild. Another one is when the central banks fire up the printing presses and start pumping liquidity into the markets. But perhaps our favorite is the increased volume of rumors.
We’re hearing rumors that Caxton Associates is blowing up. Caxton is one of the largest hedge funds in the world with around $16 billion under multi-strategy management so this would be huge and, as they say, unlikely. Some are saying it’s because of the move SEPR has made of over the past few weeks (Caxton’s largest equity position had been SEPR), others that it’s the very fashionable credit situation. Right now, all just hearsay. Maybe funds this large don't blow up. Maybe Caxton was already a red giant, and will contract into a white dwarf under a sea of redemption requests after some significant losses. Only then will it be ready for a supernova. Heard anything? You know
[The following is an imagined conversation based on a real event. After the Times ran its
Canceling conference appearances may be the latest pump and dump scheme, or just blowing off JPMorgan. Shares of Palm, maker of wireless handheld devices like the Treo, shot up more than 4% on merger speculation created by CFO Andrew Brown’s “back troubles.” Always a euphemism for an impending takeover or unveiling a new wireless megadevice, Brown used his “back trouble” to get out of speaking at a JPMorgan tech conference in Boston. Palm quickly issued its “No, Seriously” press statement, insisting that Brown was not only experiencing back trouble but was “at the physical therapist right now.”
We’re starting to hear chatter about a hedge fund meltdown. The outlines are still vague. Multi-strategy fund. Something like $3 billion under management. But nothing more. 
