NIBA - Celebrating 35 Years

NIBA Journal

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

2 min read

Notice From CME Group

On Friday, June 6 the CME Group notified us about a new "netting" policy with regard to market data fees which will apply to IBs. The NIBA has been communicating its member concerns vigorously since last November when the CME announced its decision to discontinue the long-standing waiver of these fees. This new policy may bring relief for some NIBA members. It should be noted that the "netting" policy is only applicable to data that is routed from an FCM. It does not apply to any agreements or contracts, IBs may have with individual ISVs. Many GIBs have data provider arrangements with ISVs through their FCM, so this can be good news for those GIBs. However, IIBs often access platforms through an FCM as a backup, and negotiate both their data and execution platform needs directly with the vendors, not through the FCM. According to the CME Group, one of...

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Operations
2 min read

Get to Know the Regulators

Information is essential to participants in our markets. Our markets are ever changing not only with price action but also with best practices and regulations. NIBA wants to make sure our members know their way around both the NFA and CFTC and as such will be publishing an ongoing series discussing who is who and how you can get a hold of key regulators and/or information if you ever need to. As the designated self-regulatory organization for the U.S. derivatives industry, National Futures Association (NFA) recognizes that its members, CFTC registrants, industry professionals and the general public may have questions about registration matters, regulations and other related topics. To ensure that people receive prompt, accurate answers to their questions, NFA established its Information Center in July 1985 to be a one-stop shop for almost any questions or problems that people may have. The Information Center, which typically has a staff...

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Member Announcements
3 min read

Chairman's Letter

Dear Members - The NIBA submitted our comment letter to the NFA regarding its capital requirement proposal for CTAs and CPOs and other changes to the CTA registration status. We are firmly opposed to capital requirements for CTAs and to the elimination of registration status for the group of current CTAs which NFA refers to as “inactive.” NIBA believes CPO criteria may be quite different than that for CTAs, and should be considered separately. The full text of our submission is found in this newsletter. We understand the NFA is considering all the submissions -- we hear there were many. We have requested a further opportunity to discuss this issue with the NFA before any regulations are changed. During our May 1 meeting in New York, the NFA was a part of a panel presentation on this issue, and on concerns surrounding the ability of swaps registrants to comply with...

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Member Announcements
1 min read

NYC Meeting a Success!

Thanks to everyone who helped make the May 1 event in New York City a success. We hit a new attendance high for our NYC meetings - 135 IBs, CTAs, and FCMs. Thank you to our first panel speakers: Al Helmig, Jim Steel, Fred Penha, and Howard Hopkins. Their review and outlook for the energy and metal markets was comprehensive - they are all experts in the field. Thank you to our second panel speakers: Susan Osmanski, Brian Clark and John Brand. They presented a very complete update on where swaps registrants stand with regard to compliance with current rules for IBs and CTAs, and the NFA proposal regarding capital requirements for CTAs/CPOs. We actually ran out of time for discussion on the issues -- our members had questions! A special thanks to NIBA member Howard Rennell, The Windham Group, NY, and member of the New York Athletic Club for...

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Member Announcements
1 min read

Questions for the NFA? Comments for NFA? No problem just call the NIBA!

The NIBA is now offering a premium service for its members and will be acting as a liaison between the association’s membership and the NFA. Do you have something you want to bring to the NFA but are hesitant to do so directly, let the NIBA do it for you. The NIBA is your advocate in the industry. We encourage all members to bring their issues to us. In turn, we will address each and every concern anonymously with the NFA. We have found all registrants periodically have questions on business practices, compliance, registrations, etc on which they would like NFA’s opinion. We have also found many members do not feel comfortable calling their regulator directly to ask something about which they may be unsure. We all appreciate a helping hand at times, and this is exactly what the NIBA will do for you, so please do not hesitate to...

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Member Announcements
2 min read

Arditti Center announces Dennis Chookaszian, former CEO of CNA Insurance as keynote speaker for June Risk Leadership Program

This June, DePaul University's Arditti Center for Risk Management is hosting a two-day executive risk leadership program led by Dr. Mark Frigo, Director of the Center for Strategy, Execution and Valuation, and Director of the Strategic Risk Management Lab in the Kellstadt Graduate School of Business; and Steve Lindo, an industry expert and educator with more than 20 years of risk management practice in the U.S. and internationally. The program—offered with both one and two day options—will be held Friday, June 13, 8:30 a.m. - 7:30 p.m., and Saturday, June 14, 2014, 8 a.m. - 5:30 p.m. DePaul recently held a Risk Conference at the Federal Reserve Bank of Chicago, and one of the major themes was a rising need for greater board engagement and education in risk management. This program offers a unique combination of the following elements: • Participants drawn from non-executive board directors, CEOs, CFOs, COOs, Managing...

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Swaps FX
15 min read

Legacy Swaps Brokers and Regulatory Outtrades

Traditionally, counterparties executing swaps transactions in the unregulated Over-The-Counter (“OTC”) marketplace maintained entire teams of staff devoted to the credit or delivery risk of a counter-party. Inclusive in this regime was the preeminent notion that brokers never held client funds of any kind. This key discrepancy may cause various regulatory outtrades between regulators and parties in the Introducing Broker regime, most notably the legacy swap broker and the traditional Introducing Broker (“IB”). With the move to central counter-party clearing, it is likely that legacy swaps firms will see a cost-shift to that of compliance.  The rules promulgated in response to the Financial Crisis of 2008 and subsequent failures of MF Global and Peregrine Financial Group (“PFG”) have focused primarily on the protection of customer assets and increasing market transparencies. New methods of execution, whether mandated by federal authorities or unintentionally created from dark liquidity pools, have caused significant discrepancies with...

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Managed Futures
3 min read

CTA Spotlight: Boston & Zechiel Management

Trading is difficult. If it was easy, everyone would do it. To excel at trading is even that much harder. Successfully competing against some of societies’ smartest and most ambitious requires employing a trading strategy that gives one an edge. Without it, one can only hope for mediocrity. Boston & Zechiel Management has two trading programs that aim for that edge in order to differentiate ourselves from the other successful trading programs in the managed future space.  We view the equity markets through the rhythm of cycles, similar to that of the ocean tides. Both have repeatable and predictable patterns. Our edge is the ability to find actionable (profitable) patterns in the stock market on an annual time frame. Our Annual Cycle Trading Strategy (ACTS) is a long-only, hedged, equity index trading system that seeks to hold long positions during the positive portion of the market cycle, and then liquidate...

By NIBARead article
8 min read

R.J. O'Brien & Associates (RJO)| NIBA Member Spotlight

Firm Name: R.J. O’Brien & Associates (RJO) Founded: 1914 – Celebrating firm’s Centennial this year Number of Brokers: Approximately 400 IBs in the RJO network – the largest IB network in the industry NIBA Member Since: 2013  Web: www.rjobrien.com  About the Firm: How did you get started? Do you provide additional services besides brokerage? RJO had humble beginnings as a butter and egg merchant. Founded as John V. McCarthy & Company on Oct. 17, 1914, John McCarthy started the company pushing butter on a cart.  An immigrant of Ireland, he was the first in his family to attend high school.  In 1919, the firm became a founding member of the Chicago Mercantile Exchange.  John’s son-in-law, Robert J. O’Brien, Sr., joined the firm in 1952.  Like his father-in-law, he became active in leadership of the Exchange and took over as Chairman of CME for two terms in 1967 and 1968. Through perseverance,...

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5 min read

Too Important to Fail--Another Look

The latest issue of the IMF’s Global Financial Stability report (GSFR, March 2014) provides a comprehensive analysis of the “too important to fail” (TITF) problem. http://www.imf.org/External/Pubs/FT/GFSR/2014/01/index.htm The TITF problem is a well-known one in banking literature, and it arises from the fact that in an interconnected financial world, the failure of a major financial institution can have severe negative macroeconomic and macrofinancial impacts on both a national and global basis, therefore forcing governments to intervene to prevent a financial collapse. The two decades preceding the 2008 financial crisis witnessed an unprecedented period of financial globalization. Cross-border bank claims (as reported by the Bank for International Settlements, BIS) had increased to about 50% of global GDP by 2007. Moreover, the financial globalization was accompanied by an increasingly complex web of interconnectedness among major financial institutions in about 20 core countries, which accounted for 95% of the total cross-border claims. The TITF...

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