NIBA Journal

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

December 14, 2016

NIBA SoCal Program Save the Date

February 23, 2017 - Newport Beach, CA -- Sunny southern California in late February -- what could be better? Mark your calendar now for the NIBA 2017 Winter Membership Meeting, February 23 at the Newport Beach Marriott, Newport Beach, CA. A networking cocktail reception immediately follows the business meetings. This afternoon of education includes a presentation by Erik Norland, CME Group discussing the affect of various 2016 events, including Brexit, US trade policy and immigration reform on the markets and on our businesses. Additional sessions to be announced. This event is sponsored by the CME Group; sessions also sponsored by Phillip Capital USA. Registration will open on the NIBA website in early January, 2017. Questions/suggestions: please contact John or Ralph, NIBA Co-chairs. John Jensen, jjensen@hwfi.com Ralph Preston, rpreston@hwfi.com

By NIBARead article

Benjamin Franklin on Cybersecurity (sort of)

December 14, 2016

2 min read

Benjamin Franklin on Cybersecurity (sort of)

When Benjamin Franklin coined the phrase “an ounce of prevention is worth a pound of cure,” he had fire safety in mind. Cybersecurity wasn’t on anyone’s radar. In fact, radar wasn’t on anyone radar. Nonetheless, that adage perfectly captures the importance of training staff members on cyber risks today. Employee cyber awareness is based on common-sense principles that are generally easy to implement and can save a firm from massive headaches. While the technical challenges of cyber protection fall largely to the IT staff, a firm’s rank-and-file computer users stand as the front line of cyber defense. A single employee who is uninformed or careless about cyber policies and procedures can scuttle the best practices of IT, management and an otherwise diligent staff. It is estimated that two-thirds of all data breaches are caused by current or former employees. A good cybersecurity training program reinforces the obvious – use complex...

Great Lakes Credit Union Resources

Financial Fitness Budgeting Tools Buying Your First Home Video Series Credit Report Reviews Car Buying Toolkit College Resource Center Mortgage Checklist   There are several ways to contact a GLCU representative for follow up information:https://www.glcu.org/about-us/contact/

Decoding the Myths of Managed Futures 2015

From presenting at more panel events, instructing workshops on alternative investments and teaching my managed futures/ global macro course at DePaul University in the last several years, I found it was time to update the original paper written in 2011 with additional myths added to the list. The demand for alternative investments continues to grow as investors are seeking more ways to decrease their correlation risk and tail risk of their portfolio. After the dot com bubble and the recession in the early 2000s more investors realized the need for wider diversification beyond stocks and bonds. More recently since the financial crisis the demand to reduce correlation risk and tail risk continues to grow. Managed futures (AKA Commodity Trading Advisors), a subset of alternative investments and sometimes categorized under global macro hedge funds continues to grow in popularity. However, many old myths still persist about the investment product, the managers...

Spreading European and U.S. Volatility Index Futures

It has been three years and twelve articles since I began writing the VSTOXX® newsletter. Timing seemed right (and perhaps 3 is a Fibonacci series inspired moment) to update the data of some of my past articles. Upcoming newsletters will include updated articles as well as new articles. This article updates Spreading European and U.S. Volatility Index Futures I wrote in August 2013. Liquidity is always important to an investor or trader. Table 1 gives readers an overview of the VSTOXX® Futures liquidity over the last years. Table 1: VSTOXX® Futures yearly volume and open interest as of March 2016. Source: Eurex’s Exchanges monthly statistics Zoom Chart 1: VSTOXX® and VIX daily spot prices and the VSTOXX® / VIX daily spot spread price 1 June, 1999 to 5 April, 2016. Source: Bloomberg data. In Chart 1, VSTOXX® spot trades at an average premium to VIX spot of 4.37 (with a...

Seasonality Of WTI Crude Oil Futures

Earlier this year, crude oil bounced off its multi-year low, and many market participants are now trying to determine where crude will head in the near future. Thus, it seemed timely to examine the seasonality of the front month of WTI Crude Oil futures to offer possible paths it may take. Chart 1 finds three important points of discussion regarding crude oil's historical seasonality: The 30-year average front-month futures contract has hovered between $40 and $45. The current price as of June 20, 2016, is around the 30-year average price $CL_F front month. So it is right on par with the 30-year average performance. The 30-year seasonality shows a tendency for the market to decline in the second half of the year. This doesn't mean the second half of the year will see a decline, but only a tendency for it to occur. Chart 1: 30-Year Seasonality of WTI Crude...

Correlation Of The U.S. Dollar To Commodities

I recently spoke at an ETF conference about commodities. During the panel discussion I mentioned that commodities includes a lesser known factor; currencies. An investor may view commodities partially as a currency play. Many commodities are quoted in U.S. dollars (spot $DXY). In the short-term the direction of $DXY may not impact commodities (S&P GSCI spot), however, over the longer-term a trending $DXY may impact commodities. For example, if the dollar is moving higher, commodities become more expensive to the rest of the world. Thus potentially reducing demand and potentially having an impact to suppress commodity prices. If the dollar weakens, commodities become cheaper around the world relative to other currencies. This could increase demand for commodities and potentially increase prices. The Long-term correlation of the $DXY to S&P GSCI is -0.3. However when analyzing the rolling 12-month correlation of the dollar to commodities we find the correlation has a...

Utilizing a European volatility index for Pan-European volatility

In past articles, I’ve discussed the negative correlation between the VSTOXX® Volatility index and the EURO STOXX 50® Index and how the volatility index tends to rally when equities decline (downside volatility). The recent passing of the Brexit vote on 23 June 2016 introduced immediate uncertainty and downside volatility to the global capital markets. The results of several upcoming European elections could introduce more uncertainty and volatility into the capital markets. According to Bloomberg News, 40 percent of the EU economy will be voting in 2017.[i] Market reactions to the Brexit vote are still being determined and several European elections right around the corner, this is a timely opportunity to examine various moments of global macro volatility and how several European equity indexes behaved during these moments. Does this discussion begin to identify a larger macro story of positive correlation behavior of several European equity indexes? If so, could investors...

Housekeeping, Reminders and Updates--November 2016

COMMODITY FUTURES TRADING COMMISSION Filing Period for CCO Annual Reports Extension The Commodity Futures Trading Commission (“CFTC”) announced the unanimous approval to modify CFTC Regulation 3.3. Until now, Regulation 3.3 mandated electronic filings to be completed no more than sixty (60) days after the registrant’s fiscal year-end. The modification changes registrants’ (futures commission merchants, swap dealers and major swap participants) deadline to file their chief compliance officer (“CCO”) annual reports with the CFTC to ninety (90) days after the registrant’s fiscal year-end. Additionally, the modification allows for the Director of the Division of Swap Dealer and Intermediary Oversight to grant extensions to the deadline. Additional details regarding the modification to Regulation 3.3 are available on the Ruddy Gregory, PLLC (“Ruddy Gregory”) website. The final rule has been published in the Federal Register.   Regulation 4 Amendments to CPO Financial Reporting As a result of a unanimous vote, the CFTC approved...

NIBA/DePaul Internship Joint Endeavor

The NIBA Internship Program is underway! The idea for this internship program was proposed and found strong support among NIBAs Advisory Group. Qualified students will be matched with members looking for candidates trained in a broad array of critical sectors, including Finance, Statistics, Media, Marketing, and Law. The goal of our program is to foster meaningful development - for both the interns and the member. NIBA and DePaul are currently working together to ensure a successful match of prospective interns with NIBA members. Please visit the NIBA Journal to view the current list of prospective interns. The prospective intern list will also be available on the new Member Portal very soon. The board asks all members- yes you- for constructive ideas toward strengthening the value of this program. NIBA members interested in learning more about the program or specific information on a prospective intern are encouraged to contact NIBA. Jerry...

By NIBARead article

Page 43