NIBA Journal

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

July 21, 2014

July 8 DePaul Event Follow-up

On July 8, 2014, the NIBA presented its first co-sponsored event with DePaul University on the University campus in Chicago. DePaul staff recorded the program, and the full video will be posted on this site within the next few days. The afternoon program included a session on the effect CFTC Reg. 1.22 will have on our customer relationships, and one on managed futures as an alternative investment class. Attendees received handouts from NIBA service providers, as well as from DePaul, and we all enjoyed a reception on the 11th Floor terrace of the campus downtown building. Approximately 140 individuals registered for the July 8 event which was open to all industry professionals. Thanks to DePaul University -- Alex Perry and Dr. Carl Luft specifically, session speakers, members of the NIBA Board of Directors and volunteers who created and presented a terrific program. We're all looking forward to more NIBA/DePaul events...

CME Direct/ClearPort Agency Cross

Agency Cross on CME Direct On June 9th the CME launched Agency Cross on CME Direct. Agency Cross, also known as non-block trading, allows brokers to trade ClearPort products directly into Globex in non-block sizes. Block trading restrictions have become a major area of contention for many IBs. Agency Cross functionality is a welcomed addition for many brokers and traders, besides being a necessary addition by the CME to keep up with ICE. Agency Cross was rolled out to little fanfare as many firms were not even aware of it's introduction. This was more of a soft launch for the CME to test their systems and technical infrastructure. With the success of it's initial launch, the The CME is confident that additional markets will become available this October.  The standard ClearPort qualifications still need to be met by clients and the product listing is still missing many of the popular...

Trading Technology for Retail FX

Trading Technology for Retail FX  The FX market offers many advantages to active traders – 24 hour trading, low transaction costs, the ability to earn interest on overnight positions, plus deep liquidity from a $5.3 trillion/day market.   One of the most important advantages though is the abundance of top notch technology and trading platforms that are offered completely free to traders by FX brokers.     FXCM, one of the largest FX brokers in the world, offers an array of free platforms and technology that allow for advanced system trading, an increasingly popular trend in FX trading.      Additionally, FXCM now offers system developers the opportunity to sell and distribute their custom strategies on FXCMApps.com Metatrader4 MetaTrader 4 (MT4) is the most popular and widely used trading platform among retail forex traders.  The popularity of MT4 is primarily due to the fact that it allows traders to customize...

The Cloud

I wrote this article in the “cloud”. You’ve certainly heard this term and have no doubt used a cloud service. But, what does the cloud mean and how are financial services firm taking advantage of it? To start, if you use Gmail or Google Drive / Docs you are using the cloud or a cloud service. Both are convenient services in the sense that you can access them from anywhere (and any device) and in the case of Google Docs you can share access and make simultaneous contributions. None of the information is stored on your computer (or phone or tablet) nor do you install any software (you simply use a browser), and in the case of a business operation you do not need to acquire and maintain any servers—in a physical sense. Google handles all of this for you—giving you a cloud to operate within. You essentially are leasing...

GIB Boot Camp: How to appeal to your FCM

The futures industry is ever evolving and in case you haven't noticed there are fewer and fewer FCMs interested in taking on new GIB business. A myriad of items and issues are responsible for the change in appetite the FCM has for GIB business. In particular the increase in regulatory oversight and concern for exposure to fines and other sanctions have resulted in the FCM community stepping up their review process for new IB applicants as well as retention process for existing guaranteed IBs. The FCM business has not been the most profitable in the recent past as the economy struggled and interest rates have been stagnant, which historically was a major source of revenue within the FCM community. The largest issue for the FCMs in taking on new (or keeping smaller existing) GIB relationships is the risk, which comes in many forms these days such as regulatory risk, market...

CTA Insights: Novodyn Advisors on Risk Management

It’s All About Risk Bruce Schneier, an author who wrote about how we perceive danger, outlined cognitive biases people fall victim to when making decisions about risk (Housel, 2011). Although general in nature, they apply to investing, specifically diversifying, or the lack there of.  The unknown is perceived to be riskier than the familiar. Schneier's example: "People fear kidnapping by strangers when the data supports kidnapping by relatives being much more common."  In investing: The Flash Crash in 2010 caused untold anxiety. Years later, it is still frequently mentioned as a serious risk to markets. In reality, though, it was a non-event. The entire event came and went in a few minutes. Most investors didn't even realize it occurred until it was over and losses were reversed. What made it scary is that it had never happened before and was so unexpected. Meanwhile, the risks posed by the herd mentality...

By NIBARead article

July 21, 2014

5 min read

NIBA Member Spotlight on The Windham Group

NIBA Member Spotlight on The Windham Group Firm Name: The Windham Group, Inc. Founded: April 1997 # of Brokers: Four IB Status: Independent NIBA Member Since: 1997 Address: 363 West 22nd Street, NY NY 10011 Branch Offices: n/a Web: www.e-windham.com About the Firm:  How did you get started? Do you provide additional services besides brokerage? After working for thirteen years with Cargill Investor Services, primarily in the energy futures area, I left the firm to join ING Derivatives to head up their New York branch office. But after two years with the firm ING decided to exit the futures business, and I set off on mine own and established my own firm The Windham Group, an IB specializing in the energy futures and options markets. We had a tremendous advantage in being able to tap into the client relationships that we had developed over the years at both CIS and ING to help...

By NIBARead article

July 21, 2014

3 min read

Ask the NFA

“Ask the NFA” As your industry advocate, the NIBA provides many services which help your business stay in compliance with NFA regulations. "Ask the NFA," is the way you can ask questions about those regulations and compliance requirements without having to call NFA directly. Just email us at nfacomments@theniba.com and we will get the answers for you. Please keep in mind the purpose of this contact is to keep the lines of communication between NFA and NIBA members open, not to fix any specific individual concerns. This month's questions were selected from those submitted by NIBA members over the last two months. The answers were supplied by NFA staff. Question 1: I am an IB and have an AP who did their AML annual training late by a couple of weeks. Should I notify the NFA now or wait until we are audited? Answer: There is no specific self reporting...

NFA assessment fee reduction will become effective on October 1, 2014

Notice to Members I-14-18 July 7, 2014 NFA assessment fee reduction will become effective on October 1, 2014 Effective October 1, 2014, NFA's assessment fee will be $.01 per side for futures and options contracts. The new rate is a 50 percent decrease from the current rate. NFA's Board of Directors believes that, based on recent trends in public trading volume growth, this fee reduction may be sustainable for a few years. Obviously, the trend in trading volume may change, which could either shorten or lengthen the amount of time that this fee can be maintained. For additional information, consult NFA's Interpretive Notice "NFA Bylaw 1301: NFA Assessment Fee Questions and Answers for FCMs" or contact NFA's Information Center (information@nfa.futures.org) at 800-621-3570 or 312-781-1410.

By NIBARead article

June 24, 2014

1 min read

Important Notice to CPOs and CTAs summarizing the changes to the CPO Form PQR and CTA Form PR that will become effective for the period ending June 30, 2014

On June 5, 2014 NFA issued Notice to Members I-14-13, which outlined important changes that were made to CPO Form PQR and CTA Form PR that will become effective for the period ending June 30, 2014. The updated forms will be available in the EasyFile system the first week of July 2014; however, based on feedback from CPO/CTA Members, NFA is providing this email to highlight the specific steps that were amended and/or added. If you have any questions relating to the above changes, please contact Tracey Hunt, Associate Director, Compliance (thunt@nfa.futures.org or 312-781-1284) or Mary McHenry, Associate Director, Compliance (mmchenry@nfa.futures.org or 312-781-1420). Click here to access a PDF detailing the changes

By NIBARead article

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