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John Lothian Newsletter: Trustees settle over MF Global assets, Top 10 (or 12) 2013 Predictions, 2013 will be a watershed for financial reform, Madoff, in Christmas Eve Letter John Lothian Newsletter,Newsletter

December 26, 2012:  We’re back after a short Christmas holiday. Today’s issue features a number of predictable prediction stories for 2013, including one from former IMF economist Simon Johnson and another from Forbes.  There is also a  break though in the bankruptcy case for MF Global customers as trustees announced a major settlement.  Also, if you missed it yesterday, take a look at the ongoing Restoring Customer Confidence series with James Gellert, who talks about rating FCMs, and our Allan Schoenberg video interview, as he explains how CME Group increasingly utilizes social media as a content distribution platform to discuss…

MF Global Trustee Deal: Customers Get $130M from CME Group Blog,Regulation

MF Global

MF Global trustee James Giddens struck a deal with the CME Group that recovered $130 million in customer funds from the exchange group. The agreement must be approved by a bankruptcy court and is not associated with the $1.6 billion in missing customer funds. In addition, CME Group will assign $16.5 million to cover future claims against them and will give $28.5 million to the judge overseeing the case for later assignment. Coverage: CME Group to return $130 million in MF Global funds – SunTimes MF Global Clients Get $130M From CME But $1.6B Is Still Missing – Forbes MF Global…

Trading Industry Hit by Recession Commentary,Regulation,Tech / HFT

John Lothian

The world of trading is experiencing a recession. If you were to define industry GDP as traded and cleared volumes times commissions and fees, we would have experienced two consecutive quarters of lower GDP in futures, equities and options markets.   Besides this metric, we are seeing proprietary trading firms start to shed traders, support staff and executives. A sure sign of a recession is higher unemployment. Crain’s Chicago Business reporter Lynne Marek yesterday reported that the venerable electronic trading firm GETCO had laid off 40 workers, including managing director Ed Boyle. I believe the trading world is suffering from…

MF Global Report Points Out the Weak Spots Commentary,Regulation

Jim Kharouf

There isn’t much left out of the June 4th report from MF Global Trustee James Giddens “Report of the Trustee’s Investigation and Recommendations.” It’s a thorough 181 page (275 if you count all the charts and graphs at the end) Titanic journey of MF Global under Jon Corzine’s leadership. While much has been made of the report’s focus on Corzine, as well as chief financial officer Henri Steenkamp and assistant treasurer Edith O’Brien, who often and ultimately sent money to various places, this report is most valuable for its recommendations at the end. Giddens recommends a number of changes, among…

Trustee for the Liquidation of MF Global Inc. Submits Report of Investigation and Recommendations Blog,Regulation

MF Global

Link to the report: http://jlne.ws/NcOJYp (PDF) Press release from James W. Giddens, the Trustee for the liquidation of MF Global Inc.: June 4, 2012 – New York, New York – James W. Giddens, the Trustee for the liquidation of MF Global Inc., today filed a report on his independent investigation into the failure of the broker-dealer with the United States Bankruptcy Court for the Southern District of New York, the Honorable Martin Glenn, presiding. “As attempts were made to transform MF Global into a full-service global investment bank, management failed to add to its Treasury Department and technology infrastructure, which…

CFTC Files a General Creditor Claim in the Liquidation of MF Global Blog,Regulation

Press Release from the CFTC: Washington, DC – On June 1, 2012, the Commodity Futures Trading Commission (Commission) filed a general creditor claim in the liquidation of MF Global, Inc., No. 11-02790 (Bankr. S.D.N.Y.). The Commission took this action in relation to the Division of Enforcement’s ongoing investigation related to the failure of MF Global, Inc. If that investigation results in an enforcement action against MF Global, Inc., the Commission could pursue a restitution award for the benefit of commodity customers, which in turn could be the basis for a Commission claim as a general creditor against the MF Global,…

CME Group Advisory Notice: Enhanced Customer Protections Blog,Regulation

The CME Group released the following notice on April 2, 2012: To: Chief Executive Officer, Chief Compliance Officer, Chief Financial OfficerFrom: Audit Department, Clearing House DivisionAdvisory #12-04Notice Date: April 02, 2012Effective Date:May 01, 2012 As a leader in the industry, and in conjunction with recommendations we have developed with several industry groups to further safeguard customer funds at the firm level, CME is adopting several enhancements to its reporting requirements. Customer segregation is the cornerstone of the futures industry, and it is critical to ensure the protections afforded under segregation are as strong as they can be for our market…

Self-Interest of a Customers’ Man Commentary

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.

JLN Special Report: January 2012 Volumes Down Environmental/Energy,Financials,Managed Futures,Metals,Options,Regulation,Special Report,Tech / HFT

Jim Kharouf

On Your CalendarA little over a month ago, I asked an exchange executive about falling volumes in the options space, to which he said. “January is going to tell us a lot.” January’s message to the options industry wasn’t kind. Most exchanges are reporting lower volumes for the month. Some may call it an off month, but given a host of events that have hit the financial markets – futures, options, stocks and currencies – January may be a harbinger for a rough 2012. CNBC’s Bob Pisani wrote a good story about equity market volume drops and its causes. He pointed out…