NIBA Journal

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

NFA Board of Directors IB & CTA Representatives panel
NIBA Briefings
November 13, 2013
2 min read

NFA Board of Directors IB & CTA Representatives panel

It was my privilege to moderate what I think was the most interesting presentation during the NIBA September Conference. I moderated the NFA Board of Directors IB & CTA Representatives panel. Paul Georgy, GIB, Jeff Malec, IIB, James Koutoulas, CTA and John Roe, CTA all spoke to a packed audience of the NFA registrants they represent. All four panelists are NIBA members. The session focused on what NFA IB and CTA representatives do and what they hope to accomplish through their participation on the NFA Board. Paul Georgy has served as the representative for GIBs for several years. He pointed out the NFA is very aware that GIBs play an essential role in the industry, and give the IB opinion and views significant weight in NFA Board decisions. He indicated that the NFA IB Advisory Committee which meets several times a year to advise the NFA Board on actions which...

By NIBARead article
Corzine loses bid to dismiss lawsuit
MF Global Updates
November 13, 2013
1 min read

Corzine loses bid to dismiss lawsuit

Jon Corzine, former CEO of MF Global, lost a bid to dismiss litigation that seeks to hold him, other executives and banks responsible for the company's bankruptcy. "Defendants' contentions would suggest that ... perhaps the debacle must have been the fateful work of supernatural forces, or else that the explanation for a spectacular multi-billion dollar crash of a global corporate giant is simply that 'stuff happens,' " U.S. District Judge Victor Marrero wrote in his ruling.  >Click here to read the full article

By NIBARead article
Follow up on Risk Management Procedures; 1.73 – Relates to Give Ups and Bunched Orders
November 13, 2013
2 min read

Follow up on Risk Management Procedures; 1.73 – Relates to Give Ups and Bunched Orders

CFTC Regulation 1.73 affects IBs and FCMs that execute orders for customers. Thus IBs who execute give-up orders and bunched orders must adopt risk management procedures. This new regulation has been in existence since June 2013. 1.73 came about from Dodd-Frank and requires clearing FCMs and executing firms to establish risk based limits for customer and prop accounts based on position size, order size, margin requirements, etc. It also requires the clearing FCM that is not serving as the executing firm to enter into an agreement that requires the clearing FCM to establish risk based limits for the customer and the executing firm to screen orders for compliance with those limits. Two important implications for IBS 1 the IB is required to screen customer orders to ensure they are in compliance with based limits of the clearing firm. This requires IBs to not only be aware of the risk standards...

By NIBARead article
Annual Membership Campaign - NOW
Member Announcements
November 12, 2013
1 min read

Annual Membership Campaign - NOW

Earlier this month, we kicked off the NIBA Annual Membership Campaign. All current members have been mailed a 2014 renewal reminder and can simply return the form with a renewal check. If you prefer to pay by credit card or if you need to update your firm information in order to bring your online directory listing current, please go online to the membership page on the NIBA website. To join for the first time, please use the online form. NIBA membership continues to be a real value - your dues include free attendance to membership meeting throughout the year and a listing in the online Broker Directory. Introducing Brokers and Commodity Traders Advisors can join for $150. Individual APs are invited to become members for $75. Service Providers and FCMs are encouraged to call us before filling out the membership forms. The NIBA is your professional association for education and...

By NIBARead article
NIBA Chairman Melinda Schramm's November Letter to Members
Member Announcements
November 12, 2013
3 min read

NIBA Chairman Melinda Schramm's November Letter to Members

Dear Members- Well, get ready for some good news and some not so good news. Good news #1. MF Global commodity customers are poised to get 100% back. On November 4, Trustee Giddens received approval from the MFG bankruptcy court for a plan that will repay customers in full. Neal Stevens’ article helps put this in perspective. Good news #2. The CFTC received the go-ahead from a federal court for it’s lawsuit against U.S. Bank N.A, the bank which held Peregrine Financial Group’s segregated funds. That suit alleges the bank treated the account as if it were Peregrine’s own. Now the not so great news #1. The new Recording Requirement compliance deadline looms: December 21, 2013, unless CFTC postpones or extends the time to comply. Jeff Kopiwoda has written a comprehensive update to his September Membership Meeting presentation. Not so good news #2. The CFTC approved a rule which will...

By NIBARead article
Holidays Bear Gifts of More Regulations
November 12, 2013
2 min read

Holidays Bear Gifts of More Regulations

Normal 0 false false false EN-US JA X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:Calibri; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin;} The closure of the government for several weeks did not stop the progress on new rules being discussed and implemented by the CFTC. As the IBs focus on building his/her business and serving customers’ needs, the regulatory responsibilities ramp up. The Commodity Futures Trading Commission (CFTC) is working on capital requirement adjustments for FCMs which could impact margin requirements and ultimately the amount of money customers will need per contract. The CFTC Rule 1.35(a) taping rule comes into effect on December 21, 2013. If you are an IB and fall under the guidelines set by CFTC, it is very important you comply with this rule. As discussed by the panel of attorneys at the...

By NIBA
MF Global Trustee's Advance of General Estate Assets to Make Customers Whole May Speed Distributions to Introducing Brokers
MF Global Updates
November 11, 2013
2 min read

MF Global Trustee's Advance of General Estate Assets to Make Customers Whole May Speed Distributions to Introducing Brokers

The MF Global trustee has received court approval to advance more than $600 million of general estate assets to customers to allow 100% distributions to all customers. As a result, introducing brokers with general unsecured claims may sooner receive partial interim distributions. It is unclear whether the advance will result in introducing brokers ultimately receiving lower recoveries. While a portion of the advanced assets represents relatively certain future recoveries of customer assets, a portion also does not. Nonetheless, all future recoveries of future customer assets, including those from pending class action litigation, will be allocated to the general estate and may or may not completely satisfy the full amount of the advanced funds. Therefore, it is unclear whether the advance will ultimately deplete the size of the general estate and thus the amount available to introducing brokers and other general creditors. In the trustee's motion requesting the largest portion of...

New Recording Requirements; Compliance Deadline: December 21, 2013
November 7, 2013
9 min read

New Recording Requirements; Compliance Deadline: December 21, 2013

96 Normal 0 false false false EN-US JA X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:Calibri;} A new oral communications recordkeeping requirement was one of the key topics discussed at the 2013 NIBA Conference in Chicago on September 18, 2013. Covered registrants must comply by December 21, 2013, unless they obtain an extension. A recap of the Legal Panel discussion on the new recording requirements follows for the benefit of those not in attendance. Covered Oral Communications The Commodity Futures Trading Commission amended Regulation 1.35(a) to require futures commission merchants (FCMs), large introducing brokers (IBs), retail foreign exchange dealers (RFEDs), and certain other registrants to record oral communications that lead to the execution of a transaction in a commodity interest. Covered communications include, but are not limited to, quotes, solicitations, bids, offers, instructions, trading and prices,...

By NIBA
Takeaways from the Due Diligence for IBs using CTA Programs Panel
NIBA Briefings
November 7, 2013
2 min read

Takeaways from the Due Diligence for IBs using CTA Programs Panel

The recent NIBA Conference panel Due Diligence for IBs using CTA Programs proved to be a lively discussion with strong input from the conference participants, which included both CTAs and IBs currently marketing managed futures programs. A short list of takeaways from the discussion: While CTA databases provide a lot of information on CTAs an IB should verify on their own database information. A CTA should have a 13-column spreadsheet and a completed due diligence questionnaire. They are industry standard. If they do not, it is a red flag. More and more CTAs are getting their track records audited. Entering into a marketing relationship with a CTA is like getting married – don’t get married to someone you don’t trust. A marketing agreement with a CTA should be in writing. The material business points that the arrangement should cover are: (a) compensation, (b) exclusivity, (c) capacity rights, and (d) whether...

By NIBARead article
Advice for Brokers Selling CTAs
NIBA Briefings
November 7, 2013
1 min read

Advice for Brokers Selling CTAs

1. Don’t sell anything, ever, that doesn’t have an audited Track Record. If you are selling unaudited investment managers, you are selling fantasy. 2. Don’t sell anything you don’t understand. That’s how people got involved with Madoff. 3. Don’t sell anything you don’t own. Have your lawyer check your contract with your CTA. If it isn’t bullet proof, if you aren’t 100% certain of getting paid, then expect to get cheated. 4. Own the costs and benefits you add to your investment managers. You are adding cost. So, you need to find ways to add value. For example, if you have the negotiating strength, press your investment managers to lower their fees. By Fred Gehm fredgehm@tds.net Fred Gehm is an investment consultant, a former columnist forMARHedge, and the author of the forthcoming book, Trust is Not an Option: The Practical Paranoid’s Guide to Evaluating and Selecting Investment Managers. You can...

By NIBARead article
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