NIBA Journal

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

December 3, 2012

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...

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...

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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Focus on the Membership

November 28, 2012

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...

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.

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...

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...

CFTC Consumer Outreach Update - November 2012

In 2010, Congress passed the Dodd-Frank Wall Street Re-form and Consumer Protec-tion Act, which states that the CFTC can fund customer education initiatives to help customers protect them-selves against fraud or other violations of the Commodity Exchange Act. In response, the CFTC established an Office of Consumer Outreach (OCO). Prior to establishing the OCO, CFTC staff re-viewed other federal agency financial education programs and budgets, and Commis-sioner Scott O’Malia con-ducted a hearing to gather insights into how to design the OCO. Read Full Article (PDF)

House report rebukes Corzine for MF Global's collapse

The House Financial Services Subcommittee on Oversight and Investigations released a summary of a report -- expected to be released in full today -- on the collapse of MF Global Holdings. In it, Republicans say CEO Jon Corzine's decisions led to the firm's demise. "Choices made by Jon Corzine during his tenure as chairman and CEO sealed MF Global's fate," said panel Chairman Randy Neugebauer, R-Texas. Bloomberg Businessweek (11/15), Financial Times (11/14), Wall Street Journal, The (11/14), Hill, The/On the Money blog (11/14)

NFA Announces Nominations Made by the 2012 Nominating Committee

Notice to Members I-12-26 November 9, 2012 Please Route To: Compliance/Legal Sr. Management NFA Announces Nominations Made by the 2012 Nominating Committee In accordance with NFA Bylaw 406, the Office of the Secretary has received from the 2012 Nominating Committee a list of its nominees for positions on NFA's Board of Directors and 2013 Nominating Committee. The list of nominees included with this notice shall serve as notification to NFA Members of the candidates proposed by the 2012 Nominating Committee. Other nominations may be made by petition. Article VII, Section 3(b) of NFA's Articles of Incorporation provides that: "Nominations may be made for elected FCM and LTM, IB, and CPO and CTA Director positions by: (i) Petition signed by 50 or more NFA Members* in the category for which the nomination is made (i.e., FCM and LTM, IB, and CPO and CTA); or (ii) Petition submitted by any organization or...

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