NIBA Journal

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

Proposed MF Global Settlements Lay Groundwork for Potential 100% Recovery For All Commodity Customers
MF Global Updates
January 2, 2013
3 min read

Proposed MF Global Settlements Lay Groundwork for Potential 100% Recovery For All Commodity Customers

On December 21, 2012, the MF Global Inc. ('MFGI') trustee entered into two settlement agreements with affiliates that together, if both settlements are approved and effected, provide a roadmap for potential 100% recoveries for all MFGI's commodity customers. Such 100% recoveries would depend on an elimination of the commodity customer asset shortfall through a combination of recovery of assets from affiliates, offsetting of affiliate claims and reallocation of MFGI's proprietary assets. This would be positive for IBs for a number of reasons. The trustee has entered into two separate settlement agreements, one between MFGI and MFGI's UK affiliate (the 'UK Agreement') and another between MFGI and a number of MFGI's domestic affiliates (the 'US Agreement'). The UK Agreement generally resolves a number of disputes and uncertainties, provides for the UK affiliate to pay MFGI between $500M and $600M, and offsets hundreds of millions of dollars in claims between MFGI and...

By NIBARead article
Member Obligations Under NFA Bylaw 1101 with Respect to Certain IBs Afforded Temporary Registration No-Action Relief
Marketing
December 28, 2012
5 min read

Member Obligations Under NFA Bylaw 1101 with Respect to Certain IBs Afforded Temporary Registration No-Action Relief

NFA Bylaw 1101 prohibits an NFA Member from carrying an account, accepting an order or handling a transaction in commodity futures contracts for or on behalf of any non-Member of NFA that is required to be registered with the Commodity Futures Trading Commission (CFTC) as an FCM, IB, CPO, CTA or LTM. Bylaw 1101 by its terms imposes strict liability on any Member conducting customer business with a non-Member that is required to be registered. Effective October 11, 2012, the Commodity Futures Trading Commission (CFTC) afforded certain IBs temporary registration no-action relief. Specifically, the CFTC's Division of Swap Dealer and Intermediary Oversight (DSIO) stated, in part, that it would not recommend that the Commission commence an enforcement action against a person for failing to register as an IB where the person's requirement to be registered arises from the person being involved with certain Intercontinental Exchange, Inc. (ICE) and/or New York...

IIB Candidate for NFA BOD | John Alan Vassallo
Marketing
December 18, 2012
3 min read

IIB Candidate for NFA BOD | John Alan Vassallo

Information Request Questionnaire Your Name & NFA # John Alan Vassallo 221551 How long have you personally been in the futures industry? 25 years Your 3-sentence Bio: Began working on the NYMEX floor in 1989; moved back to my home town, Dallas, TX, in 1990 to found my IB, Coquest which focuses on energy trading/hedging and managed futures. We now include an OTC brokerage company and a portion of Mega Capital, an IIB focused on managed futures. Your Disciplinary History, if any: None. Professional associations or Industry activities: I have served on the NFA Board for 10 years; NFA arbitrator; NIBA board; Preston National Bank, Dallas board 12 years; IB Advisory Committee; Episcopal School of Dallas Board, IPI (Institute for Private Investors) What do you believe is your greatest personal achievement? In partnership with my wife, our twins - now 10 years old. What do you believe is your greatest...

By NIBARead article
Coming in 2013: Swap Designated IBs
Marketing
December 4, 2012
2 min read

Coming in 2013: Swap Designated IBs

The Dodd-Frank Act of 2010 amended the definitions of FCM, IB, CPO and CTA to include "swaps." On August 13, 2012, the CFTC published final rule definitions for "swaps", "security-based swaps" and "security-based swap agreement". Therefore, any IBs that are not currently registered but are acting as an IB with respect to swaps subject to the jurisdiction of the CFTC must file to be registered with the CFTC on or before December 31, 2012, and be approved as a swap designated IB Member of NFA. In addition, any person associated with a newly registering IB that engages in activities involving swaps subject to the jurisdiction of the CFTC must register as an Associated Person (AP) and be appointed as a swap designated AP. At this time, there are no proficiency requirements for APs whose activities are limited solely to swaps. Also beginning January 1, 2013, currently registered IBs whose activities...

By NIBARead article
January 24, 2013 | SoCal Event, Newport Beach, CA
Marketing
December 4, 2012
1 min read

January 24, 2013 | SoCal Event, Newport Beach, CA

NIBA, CME Group and the NFA will host an afternoon event at Flemings Steakhouse in Newport Beach, California. Date: January 24, 2013 Time: 2:00pm-6:00pm Location: Flemings Steakhouse, Newport Beach The focus of this tri-sponsored event will be the economic and regulatory outlook for 2013. The program includes: “Global Economic Update in this Era of Dissonance” presented by Blu Putnam | Chief Economist for the CME Group. “Regulation Changes in 2013: What Should You Expect?” presented by the NFA.  “Getting Full Value from Your NIBA Membership” presented by John Jensen | President of the NIBA | President, Heritage West Financial, San Diego, CA. A Networking and Cocktail Reception will follow the presentations. All registered futures, options, forex and swaps professionals are welcome to this complimentary event, but reservations are required. NIBA membership information will be available. For additional information, contact John, jjensen@hwfi.com.  Register Now!

By NIBARead article
Chairman’s Letter - December, 2012
Marketing
December 4, 2012
2 min read

Chairman’s Letter - December, 2012

Dear Members - As 2012 draws to an end, most of us are still looking for answers to the confusing, disappointing, dangerous and just plain weird events of the past year. Regulatory, legal and accounting issues which directly affect our businesses will all undergo significant changes in 2013 - some as a direct result of the MF Global and PFGBest failures. This issue of the NIBA newsletter includes information that we hope will help you prepare for a better year ahead. In addition to the articles, NIBA is happy to announce a co-sponsored event in southern California with the CME Group and the National Futures Association. The focus of the event will be economic and regulatory outlooks for the coming year. The meeting will be held at Fleming’s Steakhouse in Newport Beach, CA on January 24, 2013 from 2-6pm. It is complimentary, but you must register to attend. The following...

By NIBARead article
CME Group Completes Acquisition of Kansas City Board of Trade
Marketing
December 4, 2012
2 min read

CME Group Completes Acquisition of Kansas City Board of Trade

Yesterday CME Group announced that it completed its acquisition of the Kansas City Board of Trade. Below is a message on this from CME Group's Tim Andriesen that went to CME Group customers and we wanted to pass this along to our industry association contacts who may have an interest. To Our Valued Customers: A few weeks ago we told you about CME Group's plans to acquire the Kansas City Board of Trade (KCBT). We are pleased to announce that the acquisition has been completed, and we will be able to offer you greater capital efficiencies, new trading opportunities and additional products over the coming months. Today, you can already trade both KCBT's flagship Hard Red Winter (HRW) wheat futures, the international benchmark for bread wheat prices, and the CBOT Soft Red Winter (SRW) wheat contract, the most liquid wheat futures contract and the benchmark for soft wheat, on CME...

By NIBARead article
Rebuilding Confidence Through Safer Markets
Marketing
December 4, 2012
2 min read

Rebuilding Confidence Through Safer Markets

Since the failures of MF Global and PFG, CME Group has worked closely with futures industry leaders to restore customer confidence and strengthen the protection of customer segregated funds. Together, CME Group, the NFA and the CFTC worked together to institute, in order to deter the misuse of customer funds, including: Daily segregation reporting by all FCMs. Bi-monthly reporting on investment of segregated funds. Increased surprise reviews of customer segregated funds. Ability to electronically confirm firms' customer seg balances. New rules providing direct, online access to firm bank accounts for confirmations. CEO/CFO accountability for disbursements of more than 25 percent of the firm's excess segregated funds which are not for the benefit of a customer, plus notification to the DSRO of such disbursements. CME Group has also updated NIBA on its Family Farmer and Rancher Protection Fund, a $100 million fund CME Group established to provide further protection for U.S....

By NIBARead article
Some Observations in the Aftermath of Hurricane Sandy
Marketing
December 3, 2012
4 min read

Some Observations in the Aftermath of Hurricane Sandy

Hurricane Sandy caused unprecedented damage to New York, New Jersey and Connecticut areas. Power outages, loss of property, transportation disruptions, and trauma affected the financial community here more severely than any time since 9/11. Many local residents were without power for more than a week. Folks with gas cans in hand stood in lines that often numbered more than 100 at filling stations hoping to procure part of limited supplies of fuel to power home generators. Transportation challenges kept many away from their jobs in the financial districts of New York, Jersey City, and Stamford, CT. Most prominent were the closures of the New York Stock Exchange and NYMEX/COMEX trading floors for two days. Other firms, such as Knight Capital, whose headquarters on the waterfront of Jersey City, suffered office closures and disruptions until generators were able to kick in. Ikon’s lower Manhattan offices were without power as the firm...

By NIBARead article
Expanded FDIC Insurance for Uninvested Cash in IRAs
Marketing
November 30, 2012
3 min read

Expanded FDIC Insurance for Uninvested Cash in IRAs

In just this past year we have seen the futures industry make headline news from the unforeseen downfall of MF Global and the failing of PFGBest shortly thereafter. Media frenzy surrounding the collapse of these high-profile firms exposed shortcomings with market oversight and left us asking the evident question - “What is the future of the futures market?” Although the severity of these cases proved a reevaluation of the futures industry is necessary, a conclusive answer has yet to be determined. An Interim Solution Between the lack of protection and these two substantial cases, confidence in investing in the futures market was shaken, clients are still fighting to retrieve their lost funds and are seeking safer ways to hold their cash. While regulatory agencies are in the process of determining the best approach for the protection of customer’s funds, there are some custodians that provide an interim solution for the...

By NIBARead article
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