A couple of weeks ago I did some soul searching in regards to the tone of many of my recent posts. They were a bit negative and there certainly has been a lot of bad news out there particularly on the regulatory front. In fact, my response to a longtime industry leader during the Futures Industry Association’s recent expo in Chicago when he asked me ‘what was the theme of this year’s expo’ was, “clinical depression.”
I wrote the post to introduce an enlightening article written by Hilary Till, co-founder and principal of Premia Capital Management, for the Heartlander Magazine (who allowed us to post it here), regarding the resiliency of the U.S. futures industry.
Till pointed out the numerous innovations centered in Chicago that led to transformational change in the industry. The point being perhaps the industry needs to complain a little less and work on that next innovation.
In conclusion she noted “…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 …through a willingness to continue to innovate through trial-and-error efforts.”
Till recently sent me a note providing a couple of real examples of this happening.
She noted how in the immediate aftermath of the MF Global bankruptcy, nobody appeared in court to represent the interest of customers until a couple of industry participants “stepped into this vacuum and quickly created a grassroots organization to represent the interests of futures customers in legal proceedings.”
That organization was the Commodity Customer Coalition founded by James Koutoulas and John Roe and she is absolutely correct. Prior to the CCC being formed the MF Global trustee fully expected the victims of the MF Global debacle to wait in queue for at least six months for a chance to get some of their money back. This was unacceptable and Koutoulas and Roe aggressively made their case and built an army of supporters, and more importantly, volunteers to take the lead in representing the end users who were the victims.
In a sense it was sad that it was necessary but it was and the CCC lit a fire under other industry participants leading to changes at the National Futures Association and pressuring the Commodity Futures Trading Commission (CFTC) to stand up for the rules and structures that were pushed aside in the early days of the debacle.
If you think the industry is under stress right now think of what it would look like if Koutoulas and Roe did not stand up and demand customer priority rules be adhered to and that the trustee work to expeditiously get customer property returned to them.
The CCC did not win every fight but they sure did pick a lot and the industry is better off for it.
Thanks to the determination of its founders and social media the CCC went from an idea to 10,000 angry members in a matter of weeks. The founders did not achieve their initial goal of being placed on the creditors committee in the bankruptcy but took a seat at the table at numerous congressional hearings and argued forcibly for the interests of former MF Global customers. The CCC educated the trustee and pushed him to fight on behalf of customers.