Amaranth Clearing House Is in the Clear

The New York Mercantile Exchange said yesterday that beleaguered hedge fund Amaranth Advisors LLC's clearing house isn't presently under threat, despite the fund's apparent losses of $4 billion dollars trading natural gas futures this month.

"The account and carrying clearing member are in good standing," Nymex said in a statement. The exchange declined to say which clearing house Amaranth used.

Clearing houses guarantee payment of wrong futures bets to the opposing party. They make daily margin calls to the parties to cover existing bets which are out of the money according to current prices. The value of Amaranth's funds under management has shrunk to $4.8 billion, from $9.2 billion as of August 31, after bad bets on natural gas futures. The Greenwhich, Connecticut-based hedge fund said year-todate losses could be more than 35%.

Amaranth stressed Monday in a letter to investors that the fund had been able to meet all its margin calls to date.

Failed New York hedge fund Mother-Rock LP told investors last week that they are unlikely to get any of their investment back. The fund, which was also devastated by bad bets on natural gas, said it still owed money to its clearing house, ABN Amro Holding NV, after the clearing house sold MotherRock's existing positions.

ABN Amro sold the positions to Amaranth but the size of the position means it wasn't likely to have been the cause of the big losses.

Investors in Amaranth include alternative investment funds associated with Morgan Stanley, Goldman Sachs and Credit Suisse. Morgan Stanley declined to comment and Credit Suisse didn't immediately return calls.

Goldman Sachs Dynamic Opportunites Ltd. said late Monday that it may post a 2.5% to 3% loss in September because of its holding in Amaranth.