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Tag Archives: futures commission merchants

Putting on My Broker Hat About Bitcoin Blog,Commentary,Fintech,Mwiki,Regulation,Tech / HFT

Everyone is asking about bitcoin. A journalist called and asked to interview me. A magazine called and asked me to write something. A brokerage firm chief risk manager called to ask me my opinion about bitcoin and bitcoin futures. Two weeks ago, a former employer I have not seen in 10 years called me out in Coindesk.com for my bitcoin qualms. At the dinner table my son Robby opened up about owning not just bitcoin, but bitcoin cash, ether and monero. This is a full-fledged mania. As I was driving home last night and thinking about bitcoin (as opposed to…

Tayloe Draughon, Neurensic – Futures Industry AI and Machine Learning Feature,MWEd,Mwiki,Regulation,Video

“As you seek worlds of opportunity, look for areas in which there are problems, because if somebody is having problems, there are going to be opportunities.” Recent advancements in technology have led to a monstrous spike in trades and trade messaging. Meanwhile, new regulations are requiring banks, brokers, dealers and futures commission merchants to not only store all of this new data, but also to conduct surveillance for trade infractions such as spoofing, layering or “banging the close.” One particular challenge is that these new regulations require proof of intent, that is whether a trader or trade algorithm intentionally broke…

Utility Player: FIS’ John Avery Sees the Derivatives Utility as a Driver of Innovation Interview,Tech / HFT,Video

In June of 2015, SunGard, now part of FIS Global, launched its post-trade derivatives utility, which aims to standardize back and middle office operations and technology, with Barclays as its first customer. According to FIS’ John Avery, it is not about commoditization so much as specialization. “If we look at the clearing market as an example, firms are really there to provide their balance sheet and client service, and use that as a differentiation tool,” says Avery. “What we don’t see is a need for those same firms to maintain a book of proprietary technology.” In other words, banks and…

Getting Squeezed: Introducing Brokers Numbers Waning, Growth Wanting, Future Questioned Blog,Commentary

New Introducing Broker numbers hit historical low; IB Numbers Shrink 17 percent Since Financial Crisis There is a funny story about former MF Global CEO Jon Corzine, when he held his first all company conference call with employees. He said he was impressed with how many investment bankers the firm had, having no clue that the number of IBs affiliated with MF Global actually meant introducing brokers. The fate of the company was probably sealed right then and there. While investment bankers have had their own problems in recent years, it is introducing brokers whose best days seem behind them….

It Ain’t Broke, but We Fixed it Anyway: A Letter to the Editor Blog,Commentary,Managed Futures,Regulation

Dear Sirs, Last week in this column, Jim Kharouf, one of my friends in the industry, referred to the “broken” FCM model. Having had a front row seat to the travails of operating an FCM over the past 10 years, I take exception to the word “broken.” While the FCM model has been bent, twisted, shaken and turned on its ear, Mark Twain said it best: “Reports of my death have been greatly exaggerated.” We all know what has happened to FCMs since business conditions began to change almost eight years ago. For me, the credit crisis began when Sentinel…

Pipelines: Nick Solinger Talks Market Infrastructure for SEFs Regulation,Video

It’s been a historic year for swap execution facilities as more were launched in the wake of Dodd-Frank rulemaking by the Commodity Futures Trading Commission. Nick Solinger, head of product strategy and chief marketing officer of Traiana, said that its been a good year for firms getting connected to SEFs and for SEFs getting off the ground. The firm connected 16 FCMs to 16 SEFs with six more on the way. “The typical FCM has been able to clear, three, four, five, six different venues with that one connection to our hub,” Solinger said. “Buy-side firms can similarly trade across…

Extreme Makeover: Gary DeWaal Says FCM Landscape has to Change Interview,Regulation,Video

Gary DeWaal

The futures commission merchant (FCM) space is likely to change dramatically in the coming years. How is the question. John Lothian News sat down with Gary DeWaal, of Gary Dewaal Associates, for his views on the shape of the brokerage industry in the coming years. “For years FCMs have tried to be everything to everybody,” DeWaal says. “Frankly, except for two or three of the big FCMs, that is not a reasonable prospect going forward. I think that FCMs are going to really have to figure out what its niche is.” DeWaal, the longtime general counsel for Newedge, said the…

Residual Interest Rule Cometh Commentary,Regulation

CFTC

The Commodity Futures Trading Commission took up the issue of enhanced customer protections today, finalizing a rule that would require futures commission merchants (FCMs) to adopt new risk management programs that relate to operations, capital and customers fund segregation. The new rule, passed this morning, will also require FCMs to keep so-called “residual interest in customer accounts.” The CFTC rule says FCMs must maintain residual interest “that is at least equal to its customers’ aggregate under margined amounts for the prior trade date by the point in time specified in the rule. Essentially, one year after the rule appears in…

John Lothian Newsletter: SEC Proposes New Exchange Tests to Curb Computer Breakdowns; Swaps Trade Group Hires Consultant Amid Probe; New clearing rules have already been broken, FCMs say John Lothian Newsletter,Newsletter

The SEC proposes a new testing regime to evaluate the ability of exchanges and brokerages to recover from natural and terrorism-related disasters. As regulatory scrutiny of the ISDAfix swap rate increases, the ISDA brings in a consultant to evaluate whether there’s a better way to set that rate. FCMs clearing OTC derivatives say that new time-limit rules for clearing trades are already being overrun.