Futures Industry Announces Insurance Study
Washington, D.C.—Dec. 7, 2012—CME Group, Futures Industry Association, the Institute for Financial Markets and National Futures Association today announced that they have jointly commissioned a firm to study the costs and benefits of adopting an insurance regime for the U.S. futures industry. The four sponsoring organizations have selected a team of experts brought together by Compass Lexecon to conduct the study under the leadership of Dr. Christopher Culp, an expert in derivatives, risk management, insurance and clearing.
The study will examine various models for providing insurance in the futures industry and assess a range of variables for each model. The sponsors expect the study to address a lack of detailed information on the potential costs and benefits associated with various insurance alternatives. The study will be completed in the spring.
"This study will help to inform policy makers and the public by providing a thorough analysis of various insurance programs," said FIA President and CEO Walt Lukken. "The sponsors are pleased that Compass Lexecon has agreed to conduct this study because of its unique expertise and background in the fields of both insurance and futures."
“As an independent educational foundation, the IFM strongly believes that this study will provide an important contribution to the public policy dialogue on customer protections in the futures industry,” said IFM Chairman Peter Borish.
The insurance study is the latest in a series of initiatives taken by the futures industry in 2012 to enhance customer protections and address the concerns raised by the collapse of MF Global and Peregrine Financial Group. New rules and systems have been put in place to provide customers with more information about the status of their funds and the financial condition of their futures commission merchants. In addition, the industry’s self-regulatory organizations are now putting in place systems to receive daily confirmations from all depositories holding customer segregated funds, and implementing new rules that will strengthen internal controls and hold senior executives accountable for authorizing the movement of customer funds and mitigating potential for misuse.
Founded in 1977, Compass Lexecon’s Chicago office pioneered the application of economics to legal and regulatory matters. As one of the world’s leading economic consulting firms, Compass Lexecon provides law firms, corporations, trade associations, and government clients with clear analyses of complex issues. Compass Lexecon has been involved in a broad spectrum of matters related to economics and finance, providing critical insight in legal and regulatory proceedings, strategic decisions, and public policy debates. The firm’s experience and expertise apply to virtually any question of economics, in virtually any context of the law, regulation, or business.
Christopher L. Culp is a Senior Advisor with Compass Lexecon, Managing Director of Risk Management Consulting Services, Inc., Adjunct Professor of Finance at The University of Chicago’s Booth School of Business, and Professor of Insurance at Universität Bern (Switzerland) in the Institut für Finanzmanagement. He has written four books and co-edited two books, all of which are about derivatives, risk management, insurance, and/or structured finance. Dr. Culp has extensive practical consulting experience in derivatives, risk management, (re)insurance, and clearing/settlement.
Background on the four sponsoring organizations:
About CME Group:
As the world's leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) is where the world comes to manage risk. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. CME Group brings buyers and sellers together through its CME Globex® electronic trading platform and its trading facilities in New York and Chicago. CME Group also operates CME Clearing, one of the world’s leading central counterparty clearing providers, which offers clearing and settlement services across asset classes for exchange-traded contracts and over-the-counter derivatives transactions. These products and services ensure that businesses everywhere can substantially mitigate counterparty credit risk.
Futures Industry Association (www.futuresindustry.org) is the leading trade organization for the futures, options and OTC cleared derivatives markets. It is the only association representative of all organizations that have an interest in the listed derivatives markets. Its membership includes the world’s largest derivatives clearing firms as well as leading derivatives exchanges from more than 20 countries.
The Institute for Financial Markets (www.theIFM.com) is a nonprofit foundation and an independent affiliate of the Futures Industry Association. The IFM provides educational courses, books, ethics and AML training, and market data to industry professionals, market-users, investors, and policymakers. In addition, the IFM funds independent research projects and publishes peer-reviewed studies in the Review of Futures Markets, a quarterly financial journal. The IFM operates autonomously as a foundation and is governed by trustees drawn from the principal segments of the industry.
National Futures Association (www.nfa.futures.org) is the industry-wide self-regulatory organization for the U.S. futures industry. Any firm or individual conducting business on behalf of the retail public on the nation's futures exchanges must be registered with the Commodity Futures Trading Commission, NFA's government oversight agency and must become NFA Members. These firms and individuals are subject to NFA rules covering every aspect of their futures trading business. NFA also regulates firms and individuals who offer retail off-exchange foreign currency trading. For more information about NFA, its membership, regulatory programs and services, visit www.nfa.futures.org.
For further information, please contact Will Acworth at the FIA at +1 202 772 3034 or firstname.lastname@example.org.