NIBA Journal

Insights, analysis, and updates from the National Introducing Brokers Association

November 21, 2011

Futures Industry Guarantees - Who Guarantees What to Whom?

Dear All, The MF Global debacle has brought to light a misunderstanding of the structure and guarantees within our industry. We are finding larger members of our community who choose to violate a code of ethics that we have observed for generations. Our industry has prided itself on the fact that no customer has lost funds held in a customer segregated account due to the financial failure of an FCM. This has been due to the cooperation of the futures exchanges, clearing houses, and the clearing members of the exchange clearing houses. It has not been due to any clearing house guarantees. In the past, when clearing firms have failed, everyone worked together to protect the customer. As our industry consolidates, (exchanges, clearing houses, FCMs and the clearing member community), the financial risks of every individual failure have grown exponentially. The Role of Exchanges vs. Clearing Houses Exchanges provide a...

What Can You Do in the Midst of the MF Global Meltdown

Many of our NIBA members have been hard hit by the MF Global debacle. Understandably, emotions are raw, frustration is high and there is widespread financial hardship. While clearly there are no instant solutions to this mess, we write to let you know what NIBA has been doing on your behalf, and what you can do. The road ahead is a potentially long, but at this juncture the immediate need is the release by the bankruptcy trustee of additional segregated funds owned by clients to not only maintain existing trading positions, but necessary for trading at all. Although the CME has added some $300 million funds, the release of all customer assets is vital to an efficient marketplace. In addition, there is the important issue of when and how, our broker membership might recover the commission revenue rightfully earned. It seems these two huge issues are out of your control...

Chairman's Message - MF Global | November 2011

Dear Members - The past three weeks have been the most frustrating, the most confusing, the most disappointing weeks I’ve spent in the 35 years I’ve been in the futures industry. Many NIBA members are suffering financial hardships due to MF Global’s failure and bankruptcy, and the process for recovery appears to be lengthy. The NIBA has received hundreds of phone and email messages both from members who are directly affected, and from those who are not. Here’s what we’ve done so far in your behalf: Submitted a Petition which included 700 signatures collected online in about 72 hours directly to the Bankruptcy Court calling for the immediate distribution of segregated funds. Attended Court and Trustee meetings in New York by representation of our Association legal advisors. Organized numerous meetings and communications with other industry professionals including the NFA, CFTC, FIA, CME and ICE. Voiced the Association’s opinions in interviews...

NFA - MF Global Statement

Over the past few weeks, National Futures Association (NFA) has been assessing how our member firms have been impacted by the MF Global Inc. bankruptcy. While NFA was not the designated self regulatory organization (DSRO) for MF Global, Inc., we have been in contact with all of our Members that had accounts with MF Global, Inc., including introducing brokers (“IB”). NFA staff is working closely with its Member firms to assess their specific situations and address their needs as best as possible. For example, when accounts were transferred out of MF Global, Inc., NFA responded to many requests from IBs to assist them in locating their customer accounts. NFA staff also worked with a number of MF Global guaranteed IBs and their new guarantors to assist with a smooth transition. On November 7, NFA sent a Notice to Members to independent introducing brokers to assess the bankruptcy's impact on their...

Petition to US Bankruptcy Court: Update

NIBA's legal advisor, Schuyler, Roche & Crisham (SRC) was present in court Thursday morning when US Bankruptcy Judge Glenn approved a plan submitted from the MF Global trustee to begin a distribution of approximately $520 million, or about 60% of customers cash collateral. Neal Stevens, an attorney with SRC, confirmed that the definition of "cash equivalents" includes T-bills. Mr. Stevens had earlier hand-delivered NIBA's online petition containing over 700 signatures collecting in only about 72 hours. The transfer of funds back to customers may begin by November 24. Some groups had objected to this method of distribution saying it was "inequitable," but the trustee indicated that that there is a third transfer of funds being considered. NIBA's online petition requested return of the customers segregated funds as quickly as possible.

Petition to US Bankruptcy Court: Release Remaining Cash Balances of Former MF Global Customers

Greetings NIBA members and supporters, We urge you to sign the following petition in order for the bankruptcy court to have a chance to hear from you - the broker, the trading advisor, the IB - directly. Some of you have the resources to pursue your interests individually, that’s great. But, the court needs to hear from all of you. Our voice is much stronger if we are unified; acting collectively, we can make a difference. This is one of the reasons you belong to and support the NIBA. We are standing up for the rights of all our members. Please sign regardless of whether you cleared with MFG. ---------------- Honorable Martin Glenn U.S. Bankruptcy Court, Courtroom 501 One Bowling Green New York City, NY 10004 The National Introducing Brokers Association (NIBA) submits this Petition urging you to exercise your authority and immediately, to the extent it does not hinder...

By NIBA

Focus on the Membership

October 28, 2011

4 min read

Allendale Inc. | Focus on the Membership, October 2011

About the Firm: How did you get started? After graduating from Southern Illinois University, I worked in animal husbandry field for several years. The desire to increase revenue while controlling my destiny led me to the futures industry. My first position in the futures industry was as a broker with Heinold Commodities. Then, in 1984 I started Allendale Inc. with partner Bill Biedermann. Our focus was to provide the best service possible to our customers and reward the personnel that worked the hardest. We are a full service brokerage firm and our customers are still our most important asset. Do you provide additional services besides brokerage? Being a full service firm we are always looking for ways to add value to our services. We provide unique research on agricultural commodities for our clients. Our research staff produces the Allendale Research Center available by subscription on our website www.allendale-inc.com. We also...

Chairman's Message | October 2011

Dear Members - Have you ever needed to talk to an attorney who knows what a "GIB" is? Would you like to know an accountant who can read a client account statement which includes options and forex positions? Look no further than the NIBA Service Providers Directory. The new Service Providers Directory is posted at https://www.theniba.com/association/ServiceProviders.aspx. It includes attorneys, accountants, publications, market information companies and others who have specific knowledge of the financial industry. These professionals have real, longtime experience in the business, and speak our language. Many companies listed offer discounts or special incentives to NIBA members. The directory is currently being opdated and expanded. If you would like to suggest a service or provider, or if you would like to list your firm, contact John Jensen, hwfi@pacbell.net. We hope that our new Service Providers Directory will be a valuable benefit of NIBA membership for you. Warm regards, Melinda

In the Future IBs and Financial Advisors Compete Head to Head | Part 2

In our previous article, the benefits of managed futures mutual funds were discussed. This article tackles some of the major issues in establishing a mutual fund. Steps Necessary for Mutual Fund Formation and Registration From a legal standpoint, the “mutual fund” is a Securities Exchange Commission (“SEC”) registered and regulated pooled investment vehicle that is required to comply a complex set of rules, regulations and statutes, including the Investment Company Act 1940 (“1940 Act”). Mutual funds are often times referred to as open ended investment companies. While SEC registered mutual funds may be organized in almost every state within the United States, a key insight is that many legal practitioners view the state of Delaware as the jurisdiction of choice when it comes to establishing an investment company. Once established in a particular jurisdiction, the investment company is put through a rigorous registration process with the SEC. In this process,...

The Interview | Sequel to, "Grow Your Business" - Part 1

On September 12, 2011, it was my pleasure to give a presentation for the National Introducing Brokers Association, “Grow Your Business by Hiring the Right People.” The response to my program has been gratifying and quite positive. Most remarked on the clarity of the message, especially the relevance and impact of the case studies involving real people and business situations. I derived immense satisfaction from offering these remarks, which reflect my more than 25 years advising financial institutions on human resources practices. The interview process, for example, is fraught with psychological issues. It is important to remember that the interview is a two-sided meeting. As the employer you are interviewing the candidate to determine if the candidate is the right person for your company. The candidate, at the same time, is interviewing you to determine if this is the right company for them. I once refused a job offer because...

By NIBARead article

Page 102

NIBA Journal

Futures Industry Guarantees - Who Guarantees What to Whom?

What Can You Do in the Midst of the MF Global Meltdown

Chairman's Message - MF Global | November 2011

NFA - MF Global Statement

Petition to US Bankruptcy Court: Update

Petition to US Bankruptcy Court: Release Remaining Cash Balances of Former MF Global Customers

Allendale Inc. | Focus on the Membership, October 2011

Chairman's Message | October 2011

In the Future IBs and Financial Advisors Compete Head to Head | Part 2

The Interview | Sequel to, "Grow Your Business" - Part 1

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