NIBA Journal

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

Peregrine Judge Grants Trustee Request To Subpoena Banks
MF Global Updates
August 8, 2012
1 min read

Peregrine Judge Grants Trustee Request To Subpoena Banks

A federal judge has granted the bankruptcy trustee for Peregrine Financial Group the right to subpoena information from financial firms, including Goldman Sachs and JPMorgan Chase, with which Peregrine and its subsidiaries dealt. Peregrine's founder, Russell Wasendorf Sr., is accused of misappropriating more than $200 million in client money. » Read Full Article on Bloomberg   The Opinions expressed are the opinions of the author. The opinions, the trading styles, trading information and trading programs are not endorsed by the NIBA, but are the individual opinions, styles, information and programs of the author.

By NIBARead article
Questions Regarding FCM Failures and NIBA’s Role
Member Announcements
August 8, 2012
4 min read

Questions Regarding FCM Failures and NIBA’s Role

Dear NIBA Membership: The collapse of Peregrine Financial Group, Inc. (‘PFG’) represents the second time within nine months that a FCM failure accompanied by a shortfall in customer segregated funds has severely impacted the businesses of NIBA members. Many of you have asked why the PFG trustee has not distributed any funds, whereas the MF Global, Inc. (‘MFGI’) trustee made distributions early on in the bankruptcy and continues to make such distributions. You have also asked what role NIBA plays in both these situations. Second question first. NIBA is organized as a membership trade association. NIBA is mandated by its Bylaws to provide education and a forum for learning and networking in order to support the business efforts of the membership. Conferences, newsletters and communications with the CFTC and other regulators are some of the ways NIBA distributes the information and provides educational support. NIBA has been committed to this...

By NIBARead article
Statement of the NIBA to the Technology Advisory Committee, CFTC
Member Announcements
July 26, 2012
5 min read

Statement of the NIBA to the Technology Advisory Committee, CFTC

July 25, 2012 Commissioner Scott O’Malia Three LaFayette Centre 1155 21st Street, NW Washington, DC 20581 Statement of the NIBA to the Technology Advisory Committee, CFTC Commissioner OʼMalia - Thank you and the CFTC Technology Advisory Committee for inviting the participation of the National Introducing Brokers Association (NIBA) in the conversation regarding the issues of the Committeeʼs meeting July 26, 2012. The NIBA was founded in 1991 as a non-profit association, whose mission is to support the business efforts of retail futures professionals through education, information and networking. Membership is open to Introducing Brokers (both IIB and GIB), Commodity Trading Advisors (CTAs) and Associated Persons (APs) registered in the futures, options and forex industries. In addition to IBs, CTAs and APs, NIBA members include nine FCMs, all domestic exchanges and 20 service providers. The NIBA Board of Directors members are elected from the membership of the Association, who then appoint...

By NIBA
Drought Pattern Appears Well-Established
Marketing
July 25, 2012
3 min read

Drought Pattern Appears Well-Established

» Drought Monitor Presentation Omaha (DTN) – What a season the crop year 2012 has turned into. A season which began with bright hopes for good production, which were bolstered by rapid planting progress, has instead turned into a nightmare of disastrously hot and dry conditions. The Drought of 2012 has carved itself a huge niche in history--alongside the droughts of 1988, the mid-1950s, and the mid-1930s. The scope of this drought is mind-boggling. As of July 19, about 80 percent of the U.S. was experiencing some form of drought conditions. This was a stunning reversal of fortune from just a few months earlier, when it looked like corn growers were going to have an historically large harvest and drought was limited to the southern tier of the country. Scientists trace the drought's origins to a combination of factors, ranging from La Niña conditions in the Pacific Ocean, which tend...

By NIBARead article
HighGround Trading Group, Inc. | July 2012 Focus on the Membership
Focus on the Membership
July 24, 2012
3 min read

HighGround Trading Group, Inc. | July 2012 Focus on the Membership

How did you get started? How did the firm get started? Mike Burke started in the business as the Controller of an FCM and worked his way up to Senior Management positions at various FCMs including Iowa Grain, RJ O’Brien and MF Global. Rick Gallwas started on the brokerage side of the business and worked into Senior Management at various brokerage operations including ZAP Futures and RJO Futures. Burke and Gallwas partnered in 2009 to form HighGround an IIB providing value added services to direct retail and commercial ag clients as well as IBs and branch offices. Does the firm provide additional services besides brokerage? The firm provides hedge consulting, managed money products and research. What are the biggest challenges your clients face today? What does the firm do to help meet those challenges? The biggest challenge facing clients today is the recent failure of two FCMs. In an attempt...

By NIBARead article
Chairman's Message | July 2012
Member Announcements
July 24, 2012
3 min read

Chairman's Message | July 2012

Dear Members - In our November 2011 newsletter I wrote: “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.” I never expected I would feel that way again. On July 9, two weeks ago, I was preparing for a trip to Washington, DC to meet with CFTC staff on several issues of concern to Association members, primarily the implementation of CFTC Rule 1.71 - Conflict of Interest. By the time I arrived at the Commission, the focus of our meetings had changed. Everyone wanted to discuss PFG. Most of us based in Chicago have met Russ Wasendorf, Sr. at one time or another. PFG was an NIBA member for a short period. When our Association would not back their efforts to have enhanced supervision and other responsibilities of the ‘tainted’ broker...

By NIBARead article
Wake Up Call– Rule 1.71 Effective Date August 3
Marketing
July 24, 2012
3 min read

Wake Up Call– Rule 1.71 Effective Date August 3

CFTC Rule 1.71, applies to conflicts of interests within a brokerage operation, among other things. That is to say that the “research” department and the “trading” desks must independently coexist. The genesis of the rule really comes from the securities industry where research departments tout trade recommendations to the brokers who in turn interact with their clients and often suggest the trade. Admittedly, there is some overlap with the commodities world, but not as much as one may suppose, leading to a conclusion that trying to replicate this concept in our industry is like comparing apples and oranges. This Rule was originally scheduled to be effective on June 4, 2012 but with the lobbying of the NIBA, FIA and others a 60 day extension was granted. Now it’s time to pay attention - August 3 the rule becomes effective. FCMs appear to be ahead of the curve on this rule...

By NIBARead article
NIBA Survey: Protecting Customer Funds
July 24, 2012
1 min read

NIBA Survey: Protecting Customer Funds

Create your free online surveys with SurveyMonkey, the world's leading questionnaire tool. The survey will remain open until September 10th and we’ll and share the final results at the NIBA Conference, Chicago September 12, 2012 and post online.

By NIBARead article
Judges in MF Global and PFG Bankruptcies to Decide Whether Proprietary FCM Assets are Allocated to Make Up Customer Seg Shortfalls
MF Global Updates
July 23, 2012
2 min read

Judges in MF Global and PFG Bankruptcies to Decide Whether Proprietary FCM Assets are Allocated to Make Up Customer Seg Shortfalls

The recent failures of MF Global and PFG represent two devastating FCM bankruptcies with substantial shortfalls in customer segregated assets. Each company also has significant firm assets – the MF Global trustee has apparently recovered more than $1.2B of firm assets and while it is too early to know what the PFG trustee will be able to marshal, PFG reported $31M of regulatory capital in its most recent Form 1-FR-FCM filing and there are news reports of an $18M office building, a $7M+ private jet and an array of other businesses and smaller properties. CFTC regulations provide that if there is a shortfall in customer segregated assets then FCM firm assets should be reallocated to make up the shortfall, giving priority to commodity customers over creditor claims. However, a bankruptcy court has found this rule to be invalid as exceeding the CFTC rule-making authority. The MF Global trustee and the...

NIBA Chicago Conference Registration Now Open
Marketing
July 23, 2012
1 min read

NIBA Chicago Conference Registration Now Open

The NIBA Fall Membership Meeting is scheduled for the afternoon of September 12, 2012 at the UBS Center in Chicago. The Agenda includes: Business Sessions: Weather - the effects of this year’s extreme weather on the markets The Economy - the Federal Reserve Bank of Chicago will share their take on the economic outlook, nationally and locally Assessing the Risks of Doing Business with your FCM - a panel discusses how to spot distress signals, and how to protect yourself and your clients. Legal Update - among the topics: implementation of CFTC Rule 1.71 - Conflicts of Interest, NFA rule changes, CME Group responses to events of the past year Break-out Sessions: Ask NFA - two open-door sessions with NFA staff Ask Viaquest - NIBA’s new insurance benefits program explained by the provider Social Sessions: Coffee & Tea Breaks throughout the afternoon Networking Cocktail Reception held jointly with CTA Expo...

By NIBARead article
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