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NIBA Journal

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

The Plan, Stan—Moving Forward on a Futures Insurance Fund
Marketing
2 min read

The Plan, Stan—Moving Forward on a Futures Insurance Fund

Statement of Commissioner Bart Chilton on the Futures Investor and Customer Protection Act (FICPA) Proposal August 9, 2012 Last November, in the wake of the MF Global debacle, I called for a futures insurance fund. It made no sense to me that banking customers had insurance (up to $250,000) through the Federal Deposit Insurance Corporation (FDIC) and that security customers had similar protections up to $500,000 through the SIPC Fund. The support for such a futures insurance fund, at the time, was essentially zero. Nobody said they liked it. A few folks said they didn't like it. Perhaps it would only encourage risky behavior by firms if they knew there was insurance, one Member of Congress suggested to me. That's a good point, which is why such a fund (if it were to exist) should never pay out for trading losses or losses as a result of a downturn in...

By NIBARead article
PFGBest Trustee Message
MF Global Updates
2 min read

PFGBest Trustee Message

The Trustee is working to be able to distribute funds to customers, with the authorization of the Bankruptcy Court, as soon as possible. However, the Trustee must ensure that any such distribution goes to the correct customers in the correct amounts. Such a distribution would, of necessity, rely on the books and records of Peregrine. This requires that the Trustee be satisfied that he can rely on the accuracy and integrity of those books and records to the extent they identify customers and set forth the balance due to such customers. This is especially important in a case that started because of a fabrication of certain of the company's books and records. Based on information received from law enforcement and regulatory authorities, the Trustee is investigating the validity of the customer account statements and must complete that investigation prior to any provisional distribution to customers. The Trustee and his professionals...

By NIBARead article
MF Global Agreement With CME Group Wins Court Approval
MF Global Updates
1 min read

MF Global Agreement With CME Group Wins Court Approval

The trustee liquidating MF Global Inc. (MFGLQ) won court approval to receive $130 million from CME Group Inc. to pay back the bankrupt brokerage’s customers and other creditors. U.S. Bankruptcy Judge Martin Glenn said in court papers filed in Manhattan bankruptcy court today that the agreement can go forward, overruling an objection from one customer. Glenn had heard arguments in court on Aug. 8., including those from the Commodities Future Trading Commission and Securities Investor Protection Corp. in support of the pact. » Read Full Article at Bloomberg   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.

By NIBARead article
CFTC Commissioner Details Plan for Futures Insurance
MF Global Updates
1 min read

CFTC Commissioner Details Plan for Futures Insurance

A shortfall in customer funds revealed at Peregrine Financial Group last month renewed calls for an insurance program for futures customers, but the plan still faces many hurdles, including getting legislation approved by Congress. "I've put this proposal out there because we need to move this discussion forward and get a new law on the books to better protect customers," Mr. Chilton said in an email. The fund, as Mr. Chilton outlines it, would be modeled on a similar insurance plan for securities customers and would be created by collecting fees from futures brokers "which would under no circumstance exceed 0.5% of the merchants' previous year gross revenue specific to futures." The insurance would pay out up to $250,000 in the event that customer money was taken. » Read Full Article at FOX Business   The Opinions expressed are the opinions of the author. The opinions, the trading styles, trading...

By NIBARead article
Giddens seeks $160 million deal between CME and MF Global unit
Marketing
1 min read

Giddens seeks $160 million deal between CME and MF Global unit

James Giddens, the trustee liquidating the broker-dealer unit of MF Global Holdings, has asked Bankruptcy Judge Martin Glenn to approve a deal where CME Group would return $160 million to the division's estate. Glenn said he will rule later. The settlement deal is backed by the Commodity Futures Trading Commission. » Read Full Article on Reuters   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.

By NIBARead article
Peregrine Judge Grants Trustee Request To Subpoena Banks
MF Global Updates
1 min read

Peregrine Judge Grants Trustee Request To Subpoena Banks

A federal judge has granted the bankruptcy trustee for Peregrine Financial Group the right to subpoena information from financial firms, including Goldman Sachs and JPMorgan Chase, with which Peregrine and its subsidiaries dealt. Peregrine's founder, Russell Wasendorf Sr., is accused of misappropriating more than $200 million in client money. » Read Full Article on Bloomberg   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.

By NIBARead article
Questions Regarding FCM Failures and NIBA’s Role
Member Announcements
4 min read

Questions Regarding FCM Failures and NIBA’s Role

Dear NIBA Membership: The collapse of Peregrine Financial Group, Inc. (‘PFG’) represents the second time within nine months that a FCM failure accompanied by a shortfall in customer segregated funds has severely impacted the businesses of NIBA members. Many of you have asked why the PFG trustee has not distributed any funds, whereas the MF Global, Inc. (‘MFGI’) trustee made distributions early on in the bankruptcy and continues to make such distributions. You have also asked what role NIBA plays in both these situations. Second question first. NIBA is organized as a membership trade association. NIBA is mandated by its Bylaws to provide education and a forum for learning and networking in order to support the business efforts of the membership. Conferences, newsletters and communications with the CFTC and other regulators are some of the ways NIBA distributes the information and provides educational support. NIBA has been committed to this...

By NIBARead article
Statement of the NIBA to the Technology Advisory Committee, CFTC
Member Announcements
5 min read

Statement of the NIBA to the Technology Advisory Committee, CFTC

July 25, 2012 Commissioner Scott O’Malia Three LaFayette Centre 1155 21st Street, NW Washington, DC 20581 Statement of the NIBA to the Technology Advisory Committee, CFTC Commissioner OʼMalia - Thank you and the CFTC Technology Advisory Committee for inviting the participation of the National Introducing Brokers Association (NIBA) in the conversation regarding the issues of the Committeeʼs meeting July 26, 2012. The NIBA was founded in 1991 as a non-profit association, whose mission is to support the business efforts of retail futures professionals through education, information and networking. Membership is open to Introducing Brokers (both IIB and GIB), Commodity Trading Advisors (CTAs) and Associated Persons (APs) registered in the futures, options and forex industries. In addition to IBs, CTAs and APs, NIBA members include nine FCMs, all domestic exchanges and 20 service providers. The NIBA Board of Directors members are elected from the membership of the Association, who then appoint...

By NIBARead article
Drought Pattern Appears Well-Established
Marketing
3 min read

Drought Pattern Appears Well-Established

» Drought Monitor Presentation Omaha (DTN) – What a season the crop year 2012 has turned into. A season which began with bright hopes for good production, which were bolstered by rapid planting progress, has instead turned into a nightmare of disastrously hot and dry conditions. The Drought of 2012 has carved itself a huge niche in history--alongside the droughts of 1988, the mid-1950s, and the mid-1930s. The scope of this drought is mind-boggling. As of July 19, about 80 percent of the U.S. was experiencing some form of drought conditions. This was a stunning reversal of fortune from just a few months earlier, when it looked like corn growers were going to have an historically large harvest and drought was limited to the southern tier of the country. Scientists trace the drought's origins to a combination of factors, ranging from La Niña conditions in the Pacific Ocean, which tend...

By NIBARead article
HighGround Trading Group, Inc. | July 2012 Focus on the Membership
Focus on the Membership
3 min read

HighGround Trading Group, Inc. | July 2012 Focus on the Membership

How did you get started? How did the firm get started? Mike Burke started in the business as the Controller of an FCM and worked his way up to Senior Management positions at various FCMs including Iowa Grain, RJ O’Brien and MF Global. Rick Gallwas started on the brokerage side of the business and worked into Senior Management at various brokerage operations including ZAP Futures and RJO Futures. Burke and Gallwas partnered in 2009 to form HighGround an IIB providing value added services to direct retail and commercial ag clients as well as IBs and branch offices. Does the firm provide additional services besides brokerage? The firm provides hedge consulting, managed money products and research. What are the biggest challenges your clients face today? What does the firm do to help meet those challenges? The biggest challenge facing clients today is the recent failure of two FCMs. In an attempt...

By NIBARead article
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