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Author Archives: John Lothian

About Author

Lothian is executive chairman and CEO of John J. Lothian & Co. and editor of the John Lothian Newsletter. He publishes MarketsWiki.com, MarketsReformWiki.com, MarketsWikiEducation.com, JohnLothianNews.com and three industry newsletters.

One Year Makes All the Difference Standard

John Lothian

A year ago at this time,  John J. Lothian & Company, Inc. was showing people something that we were working on behind the curtain; MarketsReformWiki. We showed people the site and what we had, what we hoped to have and what we thought we needed.  On February 28, we will celebrate the one year anniversary of the launch of this global regulatory reform online tool.  The pressing question in the office is whether we will reach 1 million page views in the first year.  We just passed 900K this week.

Self-Interest of a Customers’ Man Standard

John Lothian

“John is looking out for his self-interest,” said a reader.  “John must be out money,” said another. It is often assumed that what motivates each of us is our own self-interest.  We could not take a breath without that being true.  We have to breathe. I am not without self-interest.  However, my self-interest in the MF Global case is the best interests of my customers.  The customer comes first.  Always.  Ever. As a futures broker for the last 22 years (and some before that), I am a customers’ man.  That is what the position used to be called; Customers’ Man.

Competition is the Key Standard

John Lothian

I believe in competition. We need competition in regulation. Creating competition in the Self Regulatory Organization sector I believe should be part of the plan to restore customer confidence in our markets. I started thinking about this as reports surfaced that the CME Group could be stripped of their Self Regulatory Organization status. There are some that believe, regardless of what happened or did not happen with the MF Global situation, that for-profit companies should not be SROs.  I am not judging that belief or the CME’s performance with MF Global. But I am thinking of what the future might…

Pay Now or Pay Later Standard

John Lothian

So far the number one voted-on question on FuturesCrowd.com is “The Number One Priority: Make the Customers Whole.” I put that question on the site.  I have heard lots of people express this sentiment: that in order to restore customer’s confidence in the futures markets, those that are out money in the MF Global bankruptcy need to get the money back.  First that; then comes any changes in structure or industry plumbing in order to prevent future occurrences. I did not suggest any particular mechanism for the clients getting their money back.  However, there is an idea that has been floated by…

This is No Bank Robbery Standard

John Lothian

When someone robs a bank and gets away with the money, they have something fungible (cash) and easily hid. While the authorities may be able to trace the serial numbers on the bills as they start to show up in circulation, there are no other official records for the physical bills to be traced. The MF Global situation is different. Money is missing, like in a bank robbery, but the money all moved into and out of MF Global’s bank accounts where there are all kinds of physical and virtual records to trace the whereabouts and the end location of said funds….

John Lothian News launches FuturesCrowd.com Standard

FuturesCrowd

Who wants to be a Millionaire? In the television game show “Who Wants to be a Millionaire,” contestants have 4 choices on how to answer the questions.  They can answer themselves, or if they don’t know the answer, they can use one of three lifelines to try to come up with the answer. There are three types of lifelines that were used when I watched the Regis Philbin US version of the show: 50/50, Phone a Friend and Poll the Audience. Each one of these lifelines has a unique approach to problem solving.  50/50 is purely probability based.  You get…

CME Customer Letter Brings Empathetic Clarity to Unclear Situation Standard

John Lothian

The CME Group is getting bashed in the hallways, elevators and reportedly on the trading floors of the exchange over the way the MF Global bankruptcy played out. While some of this sometimes caustic criticism is justified, much of it is not. Yesterday the CME put out a customer letter to bring those impacted by the bankruptcy up to date. It is also aimed to explain how the system works and that the guarantee fund is meant to protect the integrity of the clearinghouse. The CME points out that on “October 31, when the trustee was appointed, MF Global was over-collateralized at CME Clearing.”…

Who Wants In? Standard

Ticket Seller

On October 30th, the day before MF Global declared bankruptcy, I (John Lothian) wrote an email to some industry leaders expressing my strongly-held belief that there would be no deal to buy MF Global. The biggest reason was that there “has not been any player in recent years that has come into the futures brokerage business and acquired companies with MFG’s model and proven successful,” I wrote. The futures commission merchant (FCM) business model is broken, with no better example than by the struggles of MF Global.  It is hard to earn profits when a major revenue input to your business model includes interest…

Extraordinary Times Call for Extraordinary Measures Standard

John Lothian

Today the CME Group is expected to file with the SIPC appointed bankruptcy officials and federal authorities a plan for how to proceed with their part of the orderly liquidation of MF Global, specifically the movement of open futures and futures options positions to other clearing firms. Should the proposal be approved by the bankruptcy trustee appointed by SIPC, the bankruptcy court and the CFTC, or some combination therein, then positions and underlying margins will start to move. This would be different from the current situation where only positions can be moved at the previous day’s settlement price. Positions are…