The twin debacles of MF Global and PFG have damaged the reputation of the futures industry demanding an examination of customer protection rules. New rules are being implemented, which will add cost and complexity to FCM compliance.
This was no small fraud. Coming on the heels in the MF Global debacle, it threatened the entire futures industry structure. One fraud and violation of customers segregated funds is an anomaly, two might be considered a trend.
As we are all well aware, the last two years have been the most challenging for the futures industry in the almost 80 years the two of us, collectively, have been in the business. The collapse of MF Global and the uncovering of the Peregrine Financial Group (PFG) fraud brought about the questioning of systems and procedures believed to be safe
I ran into an old friend at the Chicago Board of Trade yesterday and he told me the following joke: “What does Obamacare and CME Group’s new data fees have in common? One is 28,000 pages the other is 18 pages and both were voted on without anyone reading them.”
After years of dealing with low interest rates, new regulations and rebuilding client confidence, futures commission merchants are ready to break out and start doing what they do best: Executing trades and hopefully making money.
The implementation of Dodd-Frank has proven to be much more problematic for the regulated futures industry than initially thought and additional CFTC regulations following the MF Global and Peregrine Financial Group debacles will put extra burden on smaller non-bank FCMs.
swaps are already being cleared and the vast majority involve plain vanilla interest rate products where an end user transfers floating rate risk for the certainty of a fixed interest rate with so-called swap dealers serving as market makers.