NIBA - Celebrating 35 Years

NIBA Journal

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

Managed Futures
2 min read

An analysis of why volatility indexes are relevant

Financial markets are about making decisions in moments of uncertainty. The one certainty one can make is that no one has a crystal ball, nor can anyone predict with certainty what will occur in the future. Although seeking methods to manage portfolio volatility and tail risk may fall out of fashion from time to time based on market sentiment, it should always be utilized as part of the risk management process. Volatility indexes are instruments that may assist in the risk management process. Table 1: VSTOXX® Futures yearly volume and open interest as of October 2014 Source: Eurex Exchange’s monthly statistics In the capital markets when participants ask if a product is still relevant is often when the product finds itself out of favor. Sometimes that is when the product is at its lowest point just before it becomes relevant again and back in favor. This was exactly the situation...

By NIBARead article
Member Announcements
1 min read

NIBA Comment Letters to CFTC Regulation 1.22 and 1.35 Proposed Amendments

On behalf of the NIBA members, the board of directors have submitted the following comment letters to proposed amendments to CFTC Regulation 1.22 and 1.35. NIBA Comments on CFTC Reg. 1.22 (Residual Interest): We agreed with the proposal to eliminate the automatic margin deadline change in 2018. We also agreed that a comprehensive study of whether this rule is enhancing any customer protection and is practical and affordable for the brokerage community as a whole. We once again urged that the NIBA be in on the discussions at the Commission re: the study and any further changes to this rule. Download NIBA Comment Letter CFTC Reg 1.22 (PDF) NIBA Comments on CFTC Reg. 135 (Recording - including oral conversations): We agreed that CTAs in general should be exempt from this rule because of the nature of their relationships with their customers' transaction decisions. We also reiterated that the threshold for...

By NIBARead article
Member Announcements
3 min read

Mr. Koutoulas Needs to Prove His Allegations

On December 31, 2014, the John Lothian Newsletter published Mr. Lothian’s own opinion regarding the allegations James Koutoulas has made and publicized about the nominations of public directors by the NFA Board’s Executive Committee. Mr. Lothian was right on point. In a complaint filed with the CFTC, Mr. Koutoulas claims the NFA violated its own rules when it improperly nominated public directors to its Board of Directors in January, 2014. The NFA has denied the allegations, and went to the extent of hiring outside counsel to investigate the charges. That report, issued in February 2014, “concluded that all of the incumbent public directors had been nominated in accordance with NFA’s Articles.” During his “Town Hall” webcast on December 19, 2014, Mr. Koutoulas, repeated the accusations, including stating that the behavior of members of the NFA staff was “heinous,” according to Mr. Lothian, and called for resignations and staff retirements. The...

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Member Announcements
4 min read

NIBA Endorsements for NFA Board of Directors Election

Members of the NIBA: IB and CTAs join the NIBA for many reasons. One of the most important is to remain current on issues that impact the day-to-day operation of our businesses. The NFA impacts every aspect of our business. That is the main reason it is important to have representatives that stand up for us, and contribute valuable insight, recommendations and methods to the regulatory process. This NFA election is only the second time Board positions have been contested. The NIBA Board of Directors (BoD) believes the trend will continue, and contested elections will become the norm. As a result, NIBA members have asked the BoD to make recommendations for the contested positions. This is the first time in our history that the NIBA has recommended nominees for NFA Board positions. To ensure the recommendations accurately reflect members opinions, BoD members (excluding non-registrants and FCM members) voted. The BoD...

By NIBARead article
Member Announcements
2 min read

Chairman's Letter

Dear Members: NIBA held its annual elections in November. Ralph Preston (Heritage West Financial, Inc.), was elected to a second three-year term on the Board of Directors (BoD). The BoD appointed Jerry Nolan (County Cork, LLC) to a one-year term, and the following Association officers were elected for the coming year: Steve Petillo (Coquest, Inc.) - President Mike Burke (HighGround Trading, LLC) - Vice-President Shane Stiles (Gate 39 Media) - Vice-President, Media and Communications Buck Haworth (Born Capital Financial Services, LLC) - Treasurer Ryan Griffeth (PostRock Brokerage, LLC) - Secretary John Jensen (Heritage West Financial, Inc.) - Past President All members of the Board can be contacted by email at the addresses listed on the NIBA website. NFA Elections are in progress now. This year there are contests for both the CTA/CPO and IIB positions. You will find the position papers of each candidate, in his own words, in today’s...

By NIBARead article
5 min read

NFA Board of Directors CTA/CPO Candidate Position Paper-Kalb

NFA Board of Directors Candidate Statement Brendan R. Kalb, General Counsel & Managing Director, AQR Capital Management, LLC This is a critical time for our industry. We face a number of new challenges that have resulted from extraordinary instances of malfeasance and profound regulatory changes of the last few years. While regulators have taken a few positive steps, more needs to be done to ensure customers and our markets are better protected. If elected to NFA’s Board, my mission will be clear: to restore and preserve confidence in a rapidly changing futures market by ensuring that NFA fulfills its obligations as a regulatory body, acting swiftly via effective and intelligent self-regulation. I pledge to pursue effective regulation and hold all market participants and intermediaries to the highest levels of integrity. I plan to deliver on those promises by demonstrating effective leadership, promoting best practices, and pursuing thoughtful solutions to market...

By NIBARead article
8 min read

NFA Board of Directors CTA/CPO Candidate Position Paper-Roe/Koutoulas

Fellow CTA/CPO NFA Members: We write to ask you to cast your vote for us in the upcoming election for Board of Directors of the National Futures Association. While Board confidentiality rules limit us somewhat in what we can disclose in terms of our tenure at the Board level, we can honestly say that we have shown the same zeal for representing your interests as we did in our pro bono representation of thousands of MF Global and PFG bankruptcy victims, and will continue to do so once re-elected. Since our election, we have continued standing up for the industry, especially for CTAs and CPOs that struggle to deal with ever-increasing and changing regulation. If you deem us worthy of second terms, we will continue to work hard to balance customer protections with regulatory efficiency and reduce unnecessary or burdensome regulations that benefit no one. Why This Election Is Important...

By NIBARead article
3 min read

NFA Board of Directors IIB Candidate Position Paper-Malec

I believe individual investors and the small to midsize brokers & firms that service them are an important part of this industry, and that we need someone from such a firm to help look out for this integral segment of a futures industry increasingly dominated by the exchanges and big banks. I also believe there is more to be done following the PFG and MF Global scandals, no matter how difficult or long it takes to bring about that change. The issues I will continue to support on the NFA Board include: Better Staffing Standards for Audit Teams Better Customer Protections from FCM failures A more ‘Pro-Business’ NFA Better Promotional Material Review Easier Online systems for Filings Relaxed Net Cap Requirements More Transparency at the NFA Board & Greater Staff Accountability Opposition to CME data fees and CFTC Phone Taping Requirements No CTA/CPO Net Cap Requirement See more at: http://bit.ly/1wdyW2t...

By NIBARead article
5 min read

NFA Board of Directors IIB Candidate Position Paper-Burke

Dear Fellow IB, This letter serves as a request for your vote for my candidacy in the upcoming election for the NFA Board of Directors Independent IB position. I am honored to be the chosen candidate from all of the IBs considered for this position, including the current incumbent. Please cast your vote because your voice and opinion in this election are important. I believe there needs to be more transparency in the NFA rule making and governing process. Those of you who know me know that I am very supportive of enhanced customer protections and regulations designed to ensure those protections. That being said, in my opinion, there are regulations, interpretations of certain regulations, and NFA IB audit processes that exist which do not increase customer protections and provide little if any benefit to our industry and the clients we serve. I believe our regulators need to be held...

By NIBARead article
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