July 17, 2013
Attain Capital
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It’s been a hell of a day on Twitter, what between @ZeroHedge, et al quoting The Bernank (that never gets old);@ReformedBroker livetweeting the delivering alpha conference as only he can, and the futures industry’s own @JamesKoutoulas and @JohnLRoe live tweeting the senate hearings on the CFTC reauthorization under the CEA (Commodity Exchange Act).
Now, Senate hearings are notoriously boring – where nobody outside of Daily Show interns really watch CSPAN, and while today was a little too much info on how the sausage is made for your regular futures market investor – we’re not going to lie – we sure enjoyed futures getting the spotlight in D.C. in a way not directly related to PFG or MF Global (although those subjects surely came up).
Some of the best commentary came from Terry Duffy, executive chairman of uber futures exchange: CME, talking swap rules, the proposed residual interest rules, customer account insurance, and the CFTC being self funded. Duffy highlights per Mr. Koutoulas:
“CFTC swap rules often overstep their bounds & undermine swaps market ability to do biz.”
“subordination [of all FCM debt to customers] could hurt small FCMs ability to get financing”
“customers should have option to pay for insurance, but mandating it would crush the industry”
“oil’s been $90-$110 for 3 years. You got the wrong panel if you want to blame futures for price spikes
“self-funding would result in higher food prices, market being less competitive”
“[HFT mini flash crashes] only happen on securities markets since they don’t have a central liquidity pool”
But the elephant in the room is the proposed customer protection rule which has become known as the ‘residual interest’ rule. This rule would in effect shift the model from the FCM’s having 5 days to get the necessary margin amount from a customer on margin call (and able to bridge those 5 days with their own funds and the collective funds of all other customers on their books), to a model where the FCM has to have a sort of ‘bad debt’ allowance set aside in real time for any margin amount taken on by any customer. The FCM’s say this has the implications of shattering the 50+ year system in place, and require them to have much larger margin requirements for each customer (essentially making it so no customers go on call), creating a much more expensive market for FCM’s and customers alike.
Duffy hit the point in his prepared comments, saying according to Bloomberg:
“if a proposed ‘protective’ measure is so expensive or its impact on market structure is so severe that customers cannot effectively use futures markets to mitigate risk or discover prices, the reason to implement that measure needs to be re-examined,”
Would this really protect customers? We’re not so sure. In theory, it improves the stability of segregated funds account by keeping closer tabs on the risk other clients bring to the collective segregated funds structure, but we don’t think the rule would have prevented MF Global or PFG. As far as FCM’s are concerned – Mr. Duffy may have said it best:
“we don’t need any additional changes, we’ve done a ton to improve protections already. Just do a 1 line CFTC reauthorization”
Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.
The programs listed here are a sub-set of the full list of programs able to be accessed by subscribing to the database and reflect programs we currently work with and/or are more familiar with.
Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history. Individuals cannot invest in the index itself, and actual rates of return may be significantly different and more volatile than those of the index.
Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.
Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.
Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.
RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.
Limitations on RCM Quintile + Star Rankings
The Quintile Rankings and RCM Star Rankings shown here are provided for informational purposes only. RCM does not guarantee the accuracy, timeliness or completeness of this information. The ranking methodology is proprietary and the results have not been audited or verified by an independent third party. Some CTAs may employ trading programs or strategies that are riskier than others. CTAs may manage customer accounts differently than their model results shown or make different trades in actual customer accounts versus their own accounts. Different CTAs are subject to different market conditions and risks that can significantly impact actual results. RCM and its affiliates receive compensation from some of the rated CTAs. Investors should perform their own due diligence before investing with any CTA. This ranking information should not be the sole basis for any investment decision.
See the full terms of use and risk disclaimer here.
Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.
The programs listed here are a sub-set of the full list of programs able to be accessed by subscribing to the database and reflect programs we currently work with and/or are more familiar with.
Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history. Individuals cannot invest in the index itself, and actual rates of return may be significantly different and more volatile than those of the index.
Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.
Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.
Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.
RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.
Limitations on RCM Quintile + Star Rankings
The Quintile Rankings and RCM Star Rankings shown here are provided for informational purposes only. RCM does not guarantee the accuracy, timeliness or completeness of this information. The ranking methodology is proprietary and the results have not been audited or verified by an independent third party. Some CTAs may employ trading programs or strategies that are riskier than others. CTAs may manage customer accounts differently than their model results shown or make different trades in actual customer accounts versus their own accounts. Different CTAs are subject to different market conditions and risks that can significantly impact actual results. RCM and its affiliates receive compensation from some of the rated CTAs. Investors should perform their own due diligence before investing with any CTA. This ranking information should not be the sole basis for any investment decision.
See the full terms of use and risk disclaimer here.