From the February 01, 2012 issue of Futures Magazine • Subscribe!

Tops & Bottoms of 2011



MF Global: The failure of the eighth largest futures broker constituting the eighth largest bankruptcy on record shook the futures industry, but it was not the worst bit of news.

Industry integrity: On the same day that MF Global filed for bankruptcy, it revealed that a last-ditch effort to sell the firm to Interactive Brokers Group failed when a shortfall in the futures customer segregated accounts was discovered. This truly was shocking as segregation is the benchmark of futures regulation.

Lack of leadership: How can one event count for three bottoms? The failure of a large firm, while significant, has become routine in the last decade and U.S. futures customers have come to expect a smooth transition, ala Lehman Brothers and Refco, when a firm fails. That didn’t happen this time and people are looking for answers. So the bankruptcy is a bottom, the violation of segregation is a bigger bottom and the performance of so-called industry leaders — which have customers still waiting to be made whole more than two months later — is perhaps the most concerning long-term aspect moving forward.

Political partisanship: That some folks actually were rooting for the U.S. government to fail to meets its obligations would have been unthinkable just a few years ago; but it was going on.

Japanese earthquake/tsunami: On March 11, a massive magnitude 9.0 earthquake hit off the Northeast coast of Japan, triggering tsunamis. The disaster caused an estimated 15,844 deaths and left more than 300,000 people displaced. It also damaged several nuclear power plants, leading to a meltdown at the Fukushima Dai-ichi plant.

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