I noticed a recent pattern in some of our blogs of late and it has been somewhat negative.
The implementation of Dodd-Frank has proven to be much more problematic for the regulated futures industry than initially thought and additional Commodity Futures Trading Commission regulations following the MF Global and Peregrine Financial Group debacles will put extra burden on smaller non-bank futures commission merchants (FCMs). This seems particularly unfair and ironic given that this whole new regulatory world we are living in is largely due to the poor decisions made by the large investment banks, who were quickly back in the pink and using their Federal Reserve inspired advantage to earn billions and lobby against restrictive regulations after being bailed out.
The risk on/risk off world that emerged following the 2008 apex of the credit crisis has made it very difficult for trend followers to make money and the general investment world that tends to pay no attention to alternatives when they are outperforming traditional investments have all of a sudden put alternatives in their sights to attack them.
It seems like most of the news related to the futures industry has been bad and it can lead people involved in the industry to become discouraged. As I mentioned there are a lot of negatives out there. But nobody likes a crank and I was just reminded of an interesting fact in an enlightening article by Hilary Till, originally published by the Heartland Institute, who allowed us to post it here.
Till points out the history of innovation in the futures industry and that the current challenges to existing business models are an opportunity and invitation to innovate once again.
She states in her opening: In this brief review of the history of U.S. futures markets, one does get a sense of the resiliency of these institutions, in constantly responding to adversity, from their earliest days and well into the present. Based on this history, one would expect that resiliency to continue, but not through some “designing intelligence,” but rather through a willingness to continue to innovate through trial-and-error efforts. So perhaps it is time to stop wringing hands regarding the various challenges and roll up those sleeves to create the next chapter in innovation in the world of futures.