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China banks told to warn silver investors of trading risks

Chinese banks have been told to ensure investors in silver futures are made fully aware of the trading risks in the face of recent price swings, local media reported on Wednesday, citing a notice from the Shanghai bureau of the China Banking Regulatory Commission.

The banking regulator had asked banks in Shanghai to notify clients through text messages or calls whenever the Shanghai Gold Exchange (SGE) raises margins or adjusts the daily trading limit for the contract, to ensure investors are kept informed of their exposure and can cut positions if necessary, the Shanghai Daily said.

The SGE has adjusted silver forward contract margins six times this month as prices fluctuated widely, tracking the roller coaster ride in global spot prices . Margins were raised to as high as 20 percent on May 6. [ID:nL3E7GU06Q] [ID:nL3E7GU0JE]

Silver prices on the SGE tumbled as much as 29.8 percent in May, although it remains up 25.5 percent so far this year, settling at 8,386 yuan on Tuesday.

Investment demand for gold and silver in China has exploded, with trading volumes for silver forward contracts on the Shanghai Gold Exchange leaping more than 700 percent last year. – Reuters

Posted by on June 1, 2011. Filed under Commodities,Precious metals. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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