NIBA - Celebrating 35 Years

NIBA Journal

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

Chairman’s Letter - December, 2012
Marketing
2 min read

Chairman’s Letter - December, 2012

Dear Members - As 2012 draws to an end, most of us are still looking for answers to the confusing, disappointing, dangerous and just plain weird events of the past year. Regulatory, legal and accounting issues which directly affect our businesses will all undergo significant changes in 2013 - some as a direct result of the MF Global and PFGBest failures. This issue of the NIBA newsletter includes information that we hope will help you prepare for a better year ahead. In addition to the articles, NIBA is happy to announce a co-sponsored event in southern California with the CME Group and the National Futures Association. The focus of the event will be economic and regulatory outlooks for the coming year. The meeting will be held at Fleming’s Steakhouse in Newport Beach, CA on January 24, 2013 from 2-6pm. It is complimentary, but you must register to attend. The following...

By NIBARead article
CME Group Completes Acquisition of Kansas City Board of Trade
Marketing
2 min read

CME Group Completes Acquisition of Kansas City Board of Trade

Yesterday CME Group announced that it completed its acquisition of the Kansas City Board of Trade. Below is a message on this from CME Group's Tim Andriesen that went to CME Group customers and we wanted to pass this along to our industry association contacts who may have an interest. To Our Valued Customers: A few weeks ago we told you about CME Group's plans to acquire the Kansas City Board of Trade (KCBT). We are pleased to announce that the acquisition has been completed, and we will be able to offer you greater capital efficiencies, new trading opportunities and additional products over the coming months. Today, you can already trade both KCBT's flagship Hard Red Winter (HRW) wheat futures, the international benchmark for bread wheat prices, and the CBOT Soft Red Winter (SRW) wheat contract, the most liquid wheat futures contract and the benchmark for soft wheat, on CME...

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Rebuilding Confidence Through Safer Markets
Marketing
2 min read

Rebuilding Confidence Through Safer Markets

Since the failures of MF Global and PFG, CME Group has worked closely with futures industry leaders to restore customer confidence and strengthen the protection of customer segregated funds. Together, CME Group, the NFA and the CFTC worked together to institute, in order to deter the misuse of customer funds, including: Daily segregation reporting by all FCMs. Bi-monthly reporting on investment of segregated funds. Increased surprise reviews of customer segregated funds. Ability to electronically confirm firms' customer seg balances. New rules providing direct, online access to firm bank accounts for confirmations. CEO/CFO accountability for disbursements of more than 25 percent of the firm's excess segregated funds which are not for the benefit of a customer, plus notification to the DSRO of such disbursements. CME Group has also updated NIBA on its Family Farmer and Rancher Protection Fund, a $100 million fund CME Group established to provide further protection for U.S....

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Some Observations in the Aftermath of Hurricane Sandy
Marketing
4 min read

Some Observations in the Aftermath of Hurricane Sandy

Hurricane Sandy caused unprecedented damage to New York, New Jersey and Connecticut areas. Power outages, loss of property, transportation disruptions, and trauma affected the financial community here more severely than any time since 9/11. Many local residents were without power for more than a week. Folks with gas cans in hand stood in lines that often numbered more than 100 at filling stations hoping to procure part of limited supplies of fuel to power home generators. Transportation challenges kept many away from their jobs in the financial districts of New York, Jersey City, and Stamford, CT. Most prominent were the closures of the New York Stock Exchange and NYMEX/COMEX trading floors for two days. Other firms, such as Knight Capital, whose headquarters on the waterfront of Jersey City, suffered office closures and disruptions until generators were able to kick in. Ikon’s lower Manhattan offices were without power as the firm...

By NIBARead article
Expanded FDIC Insurance for Uninvested Cash in IRAs
Marketing
3 min read

Expanded FDIC Insurance for Uninvested Cash in IRAs

In just this past year we have seen the futures industry make headline news from the unforeseen downfall of MF Global and the failing of PFGBest shortly thereafter. Media frenzy surrounding the collapse of these high-profile firms exposed shortcomings with market oversight and left us asking the evident question - “What is the future of the futures market?” Although the severity of these cases proved a reevaluation of the futures industry is necessary, a conclusive answer has yet to be determined. An Interim Solution Between the lack of protection and these two substantial cases, confidence in investing in the futures market was shaken, clients are still fighting to retrieve their lost funds and are seeking safer ways to hold their cash. While regulatory agencies are in the process of determining the best approach for the protection of customer’s funds, there are some custodians that provide an interim solution for the...

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2012 Sees NFA and CFTC Provide Enhanced Protections for Customer Funds Held at FCMs
Marketing
4 min read

2012 Sees NFA and CFTC Provide Enhanced Protections for Customer Funds Held at FCMs

In 2012, NFA and CFTC introduced a range of rules aimed at increasing protection of customer funds held at FCMs. These rules, some of which are final and some of which are proposed but appear well on their way to implementation, generally enhance transparency, cement requirements for FCMs maintenance of FCM 'residual interest' amounts in customer segregated accounts, tighten up the types of investments FCMs may make with customer segregated assets, and require DCOs to compute FCM margin requirements without allowing the FCM to net the FCM's different customers' positions against each other. The rules heighten transparency by requiring FCMs to report segregated asset and net capital numbers more frequently and in more detail and mandating that DSROs and CFTC receive 'view only' real-time access to FCMs segregated asset accounts. NFA's BASIC system now displays to the public for each FCM a net capital report that is updated monthly and...

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Kansas City Trading Group | November 2012 Focus on the Membership
Focus on the Membership
4 min read

Kansas City Trading Group | November 2012 Focus on the Membership

Primary Markets Traded: Having been in the grain business since 1976 and at the KCBT since 1981; our expertise is grain futures and options. We primarily deal with commercial grain producers, processors and end users. How did you get started? How did the firm get started? After graduating from Milliken University I was hired by ADM. There I spent time at various facilities trading cash grain. After, I moved to Kansas City in 1981, I set up a futures clearing operation for the commodity trading side of ADM in addition to running two grain terminals in KC. In order to focus on futures in Kansas City, I made a career change to Conti Commodities managing their floor and clearing operations. In 1984 I took an opportunity with Gelderman to open a sales office predominantly handling commercial grain customers. A few years later they were purchased by MF Global and I...

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Firm works on sequestering futures brokers' client funds
Marketing
1 min read

Firm works on sequestering futures brokers' client funds

AlphaMetrix Group says its AlphaMetrix360 unit has been selected to help develop a system for separating and sequestering customer funds for futures commission merchants. The system is being built for CME Group and the National Futures Association. "Obviously, no system or set of rules can completely eliminate fraud," NFA's Karen Wuertz says. "However, this system will greatly enhance the ability to monitor the safety of customer segregated funds on a daily basis and detect potential misuses of customer funds."  Securities Technology Monitor (11/21)   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.

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Year-End Tax Planning
Marketing
3 min read

Year-End Tax Planning

Given the political landscape for 2013, the choices you make in preparing your 2012 tax returns may carry greater importance than usual. 2013 will bring a wide variety of changes: 9% Medicare Surtax for the self-employed as well as high income earners with incomes over $200k(s) and $250k(mfj). A new Medicare tax of 3.8% on all unearned income. Unless Congress acts, the Section 179 deduction will fall to $25,000 from it’s current $139,000. Bonus Depreciation will completely disappear. The threshold for the Medical Deduction will rise to 10% from it’s current 7.5%. Don’t be surprised to see reinstatement of the 36% and 39.6% tax brackets next year. The Capital Gains rate for high income earners may rise to 20% along with a 28% rate cap for itemized deductions. Finally, the Transfer Tax exemption falls from it’s current $5.12m(s)/$10.24m(mfj) to only $1m(s)/$2m(mfj). So given the changes ahead you may want to...

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Global Economics Pivoting on the FX Markets in 2013
Marketing
2 min read

Global Economics Pivoting on the FX Markets in 2013

Currency movements among the major central banks involved in ZIRP (zero interest rate policies) may dominate market attention as we move beyond (or resolve eventually) the US fiscal cliff debate. The issue is that exchange rate movements among the ZIRP currencies of the US Dollar, Euro, Japanese Yen, and British Pound can be highly challenging given that they are all effectively running the same rate policies, but from a different economic growth and fiscal policy context. Except -- the fiscal policies are all defined by having too much debt -- which means that future currency movements may often be more about the politics of the fiscal decisions than anything else. Thus, to understand the major currencies, we need to compare and contrast the fiscal policy repsonses to the overloads of debt. The presentation will combine updated economic outlooks, debt policies, and political events both to provide a global view as...

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