Chairman's Letter

Dear Members:

Lately I've been reading a lot about the "vanishing FCM." In the July issue of our newsletter, Marc Nagel wrote an excellent article on the subject. And Ginger Szala wrote an equally thoughtful piece for CTA Intelligence a few months ago.

NFA records list 62 FCMs registered in late July of this year. Contrast that number with 189 registered in 2004, 130 in 2008 and 82 registered FCMs as recently as mid-2013. The rising costs of compliance and FCM capital charge changes are most often cited as the main reasons for the declining numbers. Interest income on deposits, a once reliable revenue source for firms, has not been available for several years.

All this seems to be a bit of bad news, but is it really so bad for NIBA members? Even in the heyday of FCMs, only a few worked with IBs and their customers, or supported an emerging CTA community. So clearing options for Introducing Brokers and for start-up CTAs were always pretty limited.

We are privileged that nine of today's leading FCMs belong to the NIBA. These nine FCM members are the firms that handle a substantial portion of the total retail futures and options transactions; some also handle forex and swap business. Most work with Guaranteed Introducing Brokers, as well as Independent IBs.

This summer, the NIBA began running a series of articles focused on risk management policies at our member FCMs. Each firm has been interviewed, and reports to our members on all the important aspects of risk management, including readiness in the cybersecurity area and personnel. Each firm has its own unique strengths and criteria for entering into a clearing relationship with you.

Would it be great to have even more FCMs which handle our customers trades, provide great research and support our business efforts? Sure! But NIBA members have great choices at our member FCMs. We strongly urge you to support the FCMs that support you.

Best regards, Melinda

Melinda Schramm, Founder & Chairman
NIBA