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Insights, analysis, and updates from the National Introducing Brokers Association

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Operations

October 23, 2014

3 min read

Market Data Fees - An Opinion

As the NIBA has been reporting since last November, the CME Group is discontinuing the current market data waiver effective January 2015. For many members of the NIBA and traders at large, the financial impact could be devastating. The Zaner Group, a longtime member of the NIBA located in Chicago, is a well established IB. They are a good example of what I consider to be a traditional IB model. The knowledgeable brokers have personal relationships with their clients and offer a variety of services. Matt Zaner, CEO of Zaner Group, shared a breakdown of costs associated with the platforms and data they currently use together with his expected expenses after the waiver is discontinued. The results are staggering. he facts: An office with a dozen brokers can expect an increase in expenses for market data alone of over $15,000 per month. All firms will see costs go up. Zaner...

Get to Know the Regulators

Information is essential to participants in our markets. Our markets are ever changing not only with price action but also with best practices and regulations. NIBA wants to make sure our members know their way around both the NFA and CFTC and as such will be publishing an ongoing series discussing who is who and how you can get a hold of key regulators and/or information if you ever need to. As the designated self-regulatory organization for the U.S. derivatives industry, National Futures Association (NFA) recognizes that its members, CFTC registrants, industry professionals and the general public may have questions about registration matters, regulations and other related topics. To ensure that people receive prompt, accurate answers to their questions, NFA established its Information Center in July 1985 to be a one-stop shop for almost any questions or problems that people may have. The Information Center, which typically has a staff...

CME Group Market Data Policies Update

In November, 2013, the CME Group announced changes to market data license agreements and schedules. The resulting increase in user fees significantly affect all NIBA members. NIBA members voiced several concerns surrounding the changes and the Executive Board of Directors presented them to the exchange. On February 14, 2014, the CME Group released an update to the market data policies. One of our major issues has been addressed: the definition of non-professional. Non-professionals are now defined to include certain small business entities such as LLC, trusts, etc., that are: (i) not affiliated with a Professional, and (ii) whose primary business purpose is not trading. There is also a limit in the number of trading terminals allowed to be used at the entity to qualify as a non-professional. This definition is important because so many IB customers are organized as LLCs, trusts or other legal entities, all of which seemed to...

UPDATE: CME Market Data Fee Increase Discussion With CME Group

NIBA Members: Thank you for your comments and suggestions regarding the CME market data fee increase announced Nov. 12. Here is a summary of the Dec. 2 meeting with the CME market data team. 1. The size of the fee increase as announced -- $85 for each of the 4 exchanges per broker in your office, multiplied by every front end used, multiplied by each FCM you execute through. 2. New rules and best practices developed after the MF Global and PFG failures -- these rules essentially require brokers to use multiple platforms and/or FCMs as part of a good risk management strategy. 3. The definition of 'professional' v. 'non-professional' trader as announced -- customers who have opened accounts as 'LLC' 'Trust' or another legal designation will be considered professional because the are not natural persons. 4. The chilling effect additional fees will have on hiring new APs. 5. Enforcement...

Global Macro Economics Perspectives

In the United States, all eyes are on the Federal Reserve (Fed). There are three big questions. When and how fast will the Fed begin tapering its asset purchases (QE exit)? Who will President Obama appoint to be the next Chair of the Fed? And finally, well into the future, when will the Fed abandon its near-zero target federal funds rate and start raising rates. A qualified answer to the QE exit question may come on September 18, when the Fed issues its press release from its FOMC (Federal Open Market Committee) meeting. Whatever tapering may be announced, though, its future course is likely to be nearly totally dependent on the evolution of labor market trends. Our perspective is that we are headed for slow yet steady progress, despite some serious headwinds from fiscal policy in the US and only modest growth internationally. Perhaps, more interesting for the long-run course...

CME Group Customer Forum Feedback

CME Group wants your feedback on their recent Customer Forum: "In order to provide you with the most relevant and interesting updates on our technology and business initiatives at the CME Group Customer Forum, we ask that you complete this brief survey. This survey will take no more than 10 minutes of your time. For additional information or if you have any questions, please contact CME Global Account Management at +1 312 634 8700 in the United States." Take the Survey The Opinions expressed are the opinions of the author. The opinions, the trading styles, trading information and trading programs are not endorsed by the NIBA, but are the individual opinions, styles, information and programs of the author.

Peregrine CEO Wasendorf Gets Maximum

CEDAR RAPIDS, IOWA — Disgraced financier Russell Wasendorf will be at least 107 years old by the time he’s eligible for release from prison under the 50-year sentence handed down Thursday in Cedar Rapids. The former head of the defunct Peregrine Financial Group futures and commodities brokerage stole $215 million from more than 13,000 customers over a 20-year period. The 64-year-old Marion native pilfered customer funds to live a lavish lifestyle and expand the business, which prosecutors said was never profitable on its own. Investor confidence in the sanctity of the $37 trillion futures market was shaken by details of the scam that were contained in suicide notes discovered after Wasendorf’s botched attempt to take his own life July 9. “This is a very serious offense with staggering affects to the victims and ripple effects,” U.S. District Judge Linda Reade said. “The sentence I impose must be a deterrent to...

Due Diligence Guide to Cash Management

Few aspects of hedge fund due diligence deserve more attention – and receive less – than cash management. Historically, fund managers and investors have focused their evaluations on other, more glamorous parts of a fund’s assets and operation. For some funds, cash balances often represent a substantial percentage of the fund’s total assets. For others, the cash component may be a less significant percentage of the total. In every case, however, it is imperative that fund managers – and their investors – know at all times where that money is being held, the safeguards in place for those cash balances and the investment returns those balances are generating. Making certain that a fund’s unencumbered cash assets are kept as safe and secure as possible should be among a fund manager’s most important responsibilities. This has been underscored by the separate pronouncements in early 2009 by three highly respected and objective...

The Chairman's Letter - January 2010

In the coming year, the NIBA is adding two more ways to become a member. First, we are actively expanding our membership to include CTAs. Originally organized as an association for Introducing Brokers, NIBA has been welcoming CTAs to share information and to membership meeting for several years. In 2010, CTAs are invited to join the NIBA with full membership privileges including serving on the Board of Directors. Fees for both IB & CTA members are $150.00 per year. Second, NIBA is also accepting membership of individuals registered in the futures and/or equities industry (APs/RRs). Individuals who hold a Series 3, 7 or 63 license AND whose sponsoring firm is NOT primarily registered as an IB or CTA, may join the NIBA for $75.00 per year. John Jensen and Ralph Preston have begun the 2010 membership campaign. You can contact them directly at hwfi@pacbell.net. The NIBA Board of Directors also...

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