NIBA Journal

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

Happy Anniversary, RJO!
Member Announcements
March 19, 2014
1 min read

Happy Anniversary, RJO!

NIBA adds its congratulations to those of the industry on the anniversary of RJ O’Brien’s 100 years in business. As the last surviving founding member of the CME, RJ O’Brien is responsible for a number of industry milestones including hiring the first woman to ever work on the trading floor and taking the first deliver of a Live Cattle contract, the first live animal commodity traded. Founded as John V. McCarthy & Co. in October of 1914, the firm began as butter and egg merchants. By the time Robert O’Brien, Sr. became the president of the firm in 1959, he was already on the way to helping transform the industry in general, and making RJ O’Brien into the largest independent futures brokerage firm in the US. Full disclosure, I worked at RJO from March of 1992 until December of 1994. Mr. O’Brien, Sr.’s work ethic and integrity was, and remains,...

By NIBARead article
Announcing the Arditti Risk Management Leadership Program
Member Announcements
March 19, 2014
5 min read

Announcing the Arditti Risk Management Leadership Program

The Arditti Center is pleased to announce the launch of the Risk Management Leadership Program—a two-day executive course in the heart of downtown Chicago that provides advanced risk management leadership skills to high-level executives and board members. Developing and maintaining superior performance in corporate risk management, which is both effective in taking high-stakes decisions and fail-safe in times of stress, requires executive leadership. This interactive program focuses on the critical areas of risk management infrastructure, strategy, and decision-making. Designed and taught by industry and academic experts Steve Lindo and Dr. Mark Frigo, the program provides senior leaders with greater understanding of, and essential skills in, risk management leadership practices that have been field-tested across multiple industry sectors. Hosted at the DePaul Center in the heart of downtown Chicago (1 E Jackson Blvd), the Arditti Risk Management Leadership program spans a weekend (June 13th and 14th) of interactive case studies, including...

CTA Insights: Tyche Capital Advisors on Institutional and High Net Worth Asset raising from a CTA’s standpoint.
Managed Futures
March 18, 2014
5 min read

CTA Insights: Tyche Capital Advisors on Institutional and High Net Worth Asset raising from a CTA’s standpoint.

The last few years have been a very challenging playing field to navigate.  As a CTA one has to wear multiple hats while trying to grow a business. While our specialty is trading and risk management one has to realize this is a business that has to be run like one and while a CTA may be a great trader they also have to run a good business.  The last few years have brought more challenges in raising assets for a CTA than trying to navigate a political solution with Vladimir Putin. MF Global was a serious setback for the industry and if not for the tremendous work by James Koutoulas and John Roe the industry would have taken much worse of a hit. PFG was the next shoe to drop that provided a one two punch to the industry, which everyone is still recovering from.  As a CTA trying...

By NIBARead article
CTA/CPO Capital Requirements; More Harm than Good?
Managed Futures
March 17, 2014
14 min read

CTA/CPO Capital Requirements; More Harm than Good?

In late January 2014 the National Futures Association (“NFA”) announced to its membership they were: “…reviewing the current regulatory structure applicable to Commodity Pool Operator (“CPO”) and Commodity Trading Advisor (“CTA”) operations. In particular, NFA is looking at ways to strengthen the regulatory structure governing CPO operations to provide greater protection for customer funds… [and] exploring ways to ensure that CPOs and CTAs have sufficient assets to operate as a going concern.”   NFA then solicited input from its membership (now the general public) regarding the concept of imposing a capital requirement on its CPO and CTA members for the first time.  They also requested comments on a variety of other proposed customer protection measures.  To direct the comments NFA provided a list of questions covering a wide range of topics.  Over the past month Turnkey Trading Partners (“Turnkey”) has spent many hours talking to our clients and contemplating this proposal....

By NIBA
AG & Investment Services, Inc. | NIBA Member Spotlight
February 19, 2014
6 min read

AG & Investment Services, Inc. | NIBA Member Spotlight

Firm Name: AG & Investment Services, Inc. Founded: 1986 Number of Brokers: 3 IB Status: Guaranteed NIBA Member Since: Since first year of organization, 1991 Address: 644 First Street, Suite 2, Webster City, Iowa 50595 Web: AGandInvestments.com This month’s featured member is Ag. & Investment Services, Inc. The firm has been an NFA member continuously registered since 1987.  The firm's President, Sue Martin was kind enough to provide NIBA with the information you will read below on the firm, its principal, history and operations.  Sue has over 25 years of experience in the finance industry.  Sue can be heard on a variety of radio and television programs including “Market to Market” on PBS.  For more information on Sue or the firm, visit www.AGandInvestments.com About the Firm:                                            How did you get started? Do you provide additional services besides brokerage? In February 1972, I started working in a brokerage office, Professional...

By NIBA
Managing Risk in a Complex Agriculture Supply Chain
Trading Technology
February 18, 2014
2 min read

Managing Risk in a Complex Agriculture Supply Chain

The disruptions and extreme complexities of the commodity supply chain create great risk that needs to be managed, as well as equally great opportunities if prices move in a favorable direction. The interior (North America) agricultural commodity supply chain is heavily based on various events, such as weather impacting supply and transportation, scheduled/unscheduled maintenance of railroad tracks, and planned and required federal transportation restrictions. Global demand for agricultural commodities, the impact of regional weather, and economic and geopolitical events can also dictate interior transportation requirements. As with other commodities, transportation and storage costs can have an adverse impact on agricultural commodity prices. By responding quickly and efficiently to observed and expected changes in the supply chain, commodity market participants can optimize their business operations, reduce risk, and increase profit potential. Traditional, disparate software systems are becoming insufficient in this complex business environment as they are not built to be responsive...

CTA Insights: Clarke Capital Management on Asset Raising from a Broker's Perspective
February 18, 2014
3 min read

CTA Insights: Clarke Capital Management on Asset Raising from a Broker's Perspective

As the world’s investors become more sophisticated, the quest for portfolio diversification using more advanced strategies is growing. Investors from Wall Street to Main Street are seeking to include strategies that give them a low correlation to the stock market. Managed futures is an ideal asset class to fill this niche, providing good opportunities for market professionals such as Introducing Brokers to expand their business to include managed futures products for their client base. Clarke Capital Management (CCM) has found this to be an effective business model. Founded in 1993, CCM offers six different managed account programs with the longest continuous track record extending back to 1996. Since CCM relies on relationships with the brokerage industry to expand its reach, this offers an opportunity for brokers to partner with CCM to build their business. At CCM we make ourselves readily available to speak directly to the prospects of our Introducing...

By NIBARead article
CFTC Recording Requirements
February 18, 2014
1 min read

CFTC Recording Requirements

New recording requirements went into effect in January. Although some IBs are exempted, many are not. The NIBA has opposed this requirement from its beginnings, noting that enforcement is difficult -- if not impossible, it requires new expenses for many offices, and requirements for recording of transactions vary greatly from state-to-state. We want to revisit this issue with the CFTC. Will you send us a note explaining how the requirement is affecting you? Please include additional costs (equipment, legal advice, extra staff, etc), you have expended and expect to spend to stay in compliance; and, other issues you are running up against in order to implement this rule. Address your note to Melinda Schramm, and send it to melinda@futuresrep.com by March 1, 2014. We want to get enough feed-back to bring before the Commission. We'll compile the comments -- no individual's or IB's will be separately identified. Melinda Schramm, Chairman,...

By NIBARead article
Chairman Letter for February 2013
NIBA Briefings
February 17, 2014
3 min read

Chairman Letter for February 2013

Dear Members - If you think endless snow storms and wind chills below zero have gotten you pretty far down, don't even look at the new and proposed regulation discussed below. Over at the NFA, fines are now in place for registrants, including IBs, who are late filing various reports. Fines are in the amount of $1,000 per day! No doubt there are some bad apples who file late regularly, but currently there are no exemption or waiver procedures in place for an IB who is late once during the term of membership. Also at the NFA, a proposal to have CPOs/CTAs meet minimum financial standards has been suggested, along with a rule that requires an independent third party to review and authorize a CPO's disbursement of any pool funds, and an independent verification of performance results if those results are prepared by a third party. This proposal also includes...

By NIBARead article
Outline of Current NFA/CFTC/SEC Issues
February 17, 2014
4 min read

Outline of Current NFA/CFTC/SEC Issues

CFTC CFTC Adopts Rules Regarding Risk Management Programs for FCMs New CFTC Regulation 1.11 imposes specific risk management requirements on FCMs that accept any money, securities, or property (or extend credit in lieu thereof) to margin, guarantee, or secure any trades or contracts that result from soliciting or accepting orders for the purchase or sale of any commodity interest. In accordance with the new regulation, each FCM is required to establish, maintain, and enforce a system of risk management policies and procedures designed to monitor and manage the risks associated with the activities of the FCM, taking into account market, credit, liquidity, foreign currency, legal, operational, settlement, segregation, technological, capital, and any other applicable risks together with a description of the risk tolerance limits set by the FCM and the underlying methodology in the written policies and procedures. FCMs must file their initial 'Risk Management Program' electronically through WinJammer with...

By NIBARead article
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