Margin Call Rule Changes June 6th

[dgodsell]

TD Waterhouse released adjustments to existing margin call rules.

https://www.tdwaterhouse.ca/webbroker/tdw_margin_lending_policy.pdf

The one of interest is that ETFs with 2x leverage (i.e. HOU, HGU) have had the loan value reduced from 50% to 25%.

I'm hoping that someone can shed some light on the materiality of this change; for example, HOU is one of the most heavily traded tickers on the TSX; and other 2x ETFs are also heavily traded.

What do you think are the implications for the TSX given that the changes lower the money supply for those who would use the borrowed money to invest?

[pitz]

I personally don't think there will be any change; basically, this might cut off a few morons who bought the leveraged ETFs on margin. But nothing material enough to cause anything to happen to the market.

[i6s1]

What's the ratio of (people buying these ETFs via TD on a heavy margin) : (Actual crude oil trading volume)?

My guess would be that the overall effect on the market is insignificant.