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MF Global Updates

June 1, 2012

3 min read

Rule Submission Letter Regarding CFTC Rule 1.71

by Email June 1, 2012 Mr. David Stawick, Secretary Commodity Futures Trading Commission Three LaFayette Centre 1155 21st Street, NW Washington, DC 20581 Re: CFTC Rule 1.71 - Conflict of Interest Policies and Procedures by Futures Commission Merchants and Introducing Brokers: Scheduled to be Effective June 4, 2012 Mr. Stawick: I write in behalf of the National Introducing Brokers Association (NIBA). Founded in 1991, the NIBA represents Introducing Brokers, Commodity Trading Advisors and Associated Persons who are primarily engaged in the retail sector of the futures and options business. NIBA, a not-for-profit association, also has the support of 11 major Futures Commission Merchants and all the U.S. domestic exchanges. I write in behalf of our Introducing Broker (IB) membership, both Guaranteed IBs (GIBs) and Independent (IIBs), with regard to Rule 1.71 concerning conflicts of interest policies and procedures as they relate to research, advice and recommendations to the public. NIBA...

MF Global General Unsecured Claim Filings Due June 2, 2012 | Many IBs Should File

Many introducing brokers have general unsecured claims against MF Global Inc. Such claims must be filed with the trustee by 11:59 PM Eastern Standard Time on June 2, 2012. The claim form can be downloaded in .pdf format from the trustee's website at www.mfglobaltrustee.com and may be filed either electronically by sending the form into the trustee's e-mail account at mfglobalclaims@epiqsystems.com or by mailing the form in to the address shown on the claim form. If the claim is sent to the e-mail address then the claimant should immediately receive a bounceback e-mail message indicating that the trustee received the e-mail. Although the bounceback e-mail message does not provide any information specific to the claim filed, in conjunction with the claimant's outgoing message the claimant can keep the bounceback message as a record that the e-mail with the filing was made in a timely manner. Typical introducing broker claims that...

CME Group Family Farmer and Rancher Protection Fund Update

By Bryan Durkin, CME Group Chief Operating Officer and Managing Director, Products & Services We are pleased to announce that registration resources are now available for the CME Group Family Farmer and Rancher Protection Fund. This $100 million program has been established to provide further protection of customer segregated funds for U.S. family farmers and ranchers who hedge their business in CME Group futures markets. For registration forms and further information, please consult www.cmegroup.com/familyfarmerfund. Under the terms of the Family Farmer and Rancher Protection Fund, farmers and ranchers using CME Group products will be eligible for up to $25,000 per participant in the case of losses resulting from the future insolvency of a clearing member or other market participant. Farming and ranching cooperatives also will be eligible for up to $100,000 per cooperative. Since the failure of MF Global, in which a clearing firm violated CFTC regulations and misused customer...

MF Global Customers Face Tax Reporting Issues

Commodity customers of failed futures broker MF Global, Inc., face several tax issues relating to the broker's liquidation.  First, the customers must determine what tax items relating to their MF Global accounts to include in the preparation of their 2011 tax returns.  Second, the customers may need to decide when and whether they can deduct a loss for any amounts not recovered. Normally, commodity customers of an FCM receive from the FCM Forms 1099-B (which generally report trading gains and losses) and 1099-INT (which report interest income) that indicate what items the customers should include in their tax reporting.  The SIPC trustee administering MF Global's liquidation currently indicates on the trustee's website that he has requested an extension of the deadline for filing and mailing Forms 1099 to mid-March.  Notably, the trustee faces challenges in preparing the Forms 1099-B.  For customers that traded on foreign exchanges, the trustee must calculate...

Senate Letter to IRS - Tax Guidance for MF Global Customers

The Honorable Douglas H. Shulman Commissioner of Internal Revenue Internal Revenue Service 1111 Constitution Avenue, NW Washington, DC 20224 February 27, 2012 Dear Commissioner Shulman We are writing on behalf of the former customers of MF Global, Inc, On October 3 1,20 II , the firm filed for bankruptcy after revealing that hundreds of millions of dollars in customer money had gone missing, With tax deadlines fa st approaching, and with so much uncertainty still remaining over the fate of that money, we ask your agency to issue immediate guidance to MF Global's customers and to be flexibl e with those customers who may need to file their taxes with incomplete information. Former MF Global customers are still waiting for 1099 forms detailing gains and losses to their accounts in 20 I I . The court-appointed trustee applied for and received two ex tensions from your agency, but the former...

CFTC Held Open Meeting to Consider One Final Rule and One Proposed Rule

Washington, DC – The Commodity Futures Trading Commission (CFTC) held a public meeting on Thursday, February 23, 2012, at 9:30 a.m. For more details and a link to watch a live webcast of the meeting, please visit: http://www.cftc.gov/PressRoom/PressReleases/pr6184-12

NFA Annual Meeting Review

Dear Members: I attended the NFA Annual Meeting today. As usual, there were more NFA employees than NFA members attending. The meeting lasted about 30-minutes and was very focused on issues surrounding the MF Global failure and crisis. Dan Roth, NFA President listed NFA actions by breaking them into three categories: 1. Things that the NFA might be able to do differently in co-operation with other SROs. 2. Things that the NFA can do differently by changing their own rules. 3. Things that are outside the authority of the NFA, but might be done differently if the industry makes the need for change clear. Several things that are being discussed with the committee of SROs sound like good ideas, and might not be so difficult to accomplish: (i) requiring seg investment detail reports to be filed more often and perhaps even displayed on NFA's website; (ii) performing more frequent spot...

CME Group Establishes $100M Fund to Provide Additional Protection for Family Farmers and Ranchers

Fund Launched as Initial Step in Restoring Confidence of Market Users CHICAGO, February 2, 2012 – CME Group today announced that it will establish a $100 million fund designed to provide further protection of customer segregated funds for U.S. family farmers and ranchers who hedge their business in CME Group futures markets. In light of the recent MF Global failure, in which a clearing firm violated CFTC regulations and misused customer monies that should have been kept segregated, CME Group is adding this extra security measure to protect the country’s food producers who are using CME Group futures markets to hedge their crops and livestock that feed the world. Under the Family Farmer and Rancher Protection Fund, expected to be in effect by March 1, 2012, farmers and ranchers using CME Group products will be eligible for up to $25,000 per account in the case of losses resulting from the...

Trading Program Performance Calculations and Presentation by CTAs with Client Assets held at MF Global, Inc.

Notice to Members I-12-04 January 27, 2012 Frequently Asked Questions - Trading Program Performance Calculations and Presentation by CTAs with Client Assets held at MF Global, Inc. As a result of the October 31, 2011 bankruptcy proceeding involving MF Global, Inc. (MFG), NFA has received a number of questions from CTAs regarding how to calculate and present performance information for Trading Programs with client managed accounts that were affected by the MFG bankruptcy proceeding. NFA is issuing this notice to address those frequently asked questions. 1. All of my managed client accounts were held at MFG. The open positions in those accounts were subsequently transferred to another FCM. After the transfer, I continued to trade the accounts according to the trading program. How do I reflect the performance results? Results should be based upon the assets under the CTA's control. Any customer assets that were not included in the transfer...

MF Global Trustee Continues Response to NIBA's Commission Run Request

Over 80 Introducing Brokers have contacted the MF Global Bankruptcy Trustee's office to date to request their October commission runs. The process for requesting your office run is posted in the NIBA update "IBS Granted Access to October Commission Runs" here. Introducing Brokers are able to receive their October MF Global commission runs as a result of a request made by NIBA through its legal advisors, Schuyler, Roche & Crisham, directly to the Trustee in behalf of our members.

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