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Category Archives: Commentary

Commentary from the John Lothian News staff and guests editors.

Pay Now or Pay Later Standard

John Lothian

So far the number one voted-on question on 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….

Why the Internet is Going on Strike Standard

Jeff Bergstrom

As a media company dedicated to the financial sector, John J. Lothian & Company would not ordinarily comment on proposed legislation unrelated to the financial industry.  However, as a media company and one that is a particular fan of the First Amendment, we feel this issue is of import not only to us but to all our readers, as the potential effects of this proposed legislation will easily reach into all our lives and businesses. On January 18, a number of websites including Wikipedia, Reddit and BoingBoing will be going “dark” in protest of the Stop Online Piracy Act (SOPA)…

Guest Commentary: 2012: Hope and Expectations – by Maurice Pomery Standard

Maurice Pomery is the founder of Strategic Alpha, a London-based asset management firm focused primarily on the foreign exchange market. He is regularly quoted as an FX expert in The Financial Times, and he appears each Wednesday on CNBC Europe’s Closing Bell program. Through his affiliates at FIXI Chicago, Pomery has offered to share his 2012 FX outlook with JLN FX. Introduction Whilst I realise that this year of 2011 has been a difficult one for many, it appears that a lot of strategists are now seeing a lot of what we forecast for the year materialise, albeit belatedly. Thus…

Apology accepted, now… Standard

Jim Kharouf

In an elevator in the Chicago Board of Trade Building in Chicago, one guy was speaking with another. “They ought to take everything he owns, sell it and add that to the money that he stole,” said the guy, referring to former MF Global CEO Jon Corzine. He paused for a moment. “But that’s not gonna happen.” Bing! The doors opened and that was the end of the conversation. Ride the elevators at the storied and proud CBOT for a while and you’re likely to hear some version of that conversation again and again. People are mad – no, angry,…

Guest Commentary: How to Save the Futures Industry Standard

They're saved

Guest Commentary By Jeff Malec, CEO – Attain Capital Management: To say the MF Global situation is a mess may be the understatement of the century. What began as an excuse to extol the segregated account’s safeguards against an FCM stock slide as MF Global shares lost 70% of their value in a week rapidly morphed into a full-fledged industry disaster as bankruptcy papers were filed and executives acknowledged a shortfall in those previously sacrosanct accounts. This admission, in conjunction with the bankruptcy, has caused over $5 Billion of customer funds held by MF Global to be frozen, unable to…

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…

Futures Seeing Blue Standard

Jim Kharouf

As regulators, exchanges and firms comb through the mess that is MF Global, its painfully clear that this industry needs some self-examination. One of the life bloods of the futures business has come from retail and individual traders who help pump in liquidity. One may argue that some, even much of that needed speculative liquidity is now being supplanted by the proprietary trading shops and other institutional players in this space. Nonetheless, MF Global’s spectacular fall has harmed the reputation of the futures industry and produced what every good broker tries to avoid – lousy and in some cases disastrous customer experiences….