Life of a Brokerage Firm

Life of a Brokerage Firm <Part Three> Ron Grossman and Ryan Griffeth conducted as series of interviews discussing the various stages of a brokerage firm.  Interviews are presented here in Q&A form.  The focus of part three is on the exit strategy, or lack thereof, and what firms who have formalized these types of strategies are doing to implement them successfully. <Industry Professional> Michael Coglianese, Coglianese, CPA How many firms do you talk to that have an exit strategy formalized?  10%.  They all should have them. What would you advise a firm or broker who had an exit strategy but…...

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Chairman Letter for February 2013

Dear Members – If you think endless snow storms and wind chills below zero have gotten you pretty far down, don’t even look at the new and proposed regulation discussed below. Over at the NFA, fines are now in place for registrants, including IBs, who are late filing various reports. Fines are in the amount of $1,000 per day! No doubt there are some bad apples who file late regularly, but currently there are no exemption or waiver procedures in place for an IB who is late once during the term of membership. Also at the NFA, a proposal to…...

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CME Group Market Data Fee FAQ Clarification

CME Group Market Data Fee FAQ In response to the NIBA, the CME Group Market Data Team has submitted the following clarification to its November 12, 2013 notice regarding market data fees: Question: I am an end user, with one software application that has order routing capabilities to multiple broker/FCMs. Do I have to pay the market data fees for each broker/FCM connection? Answer: No, market data fees are assessed per device, not per the number of order routing connections. The CME Group has indicated it will notify us promptly of any additional clarifications or changes to the original announcement....

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Chairman’s Letter for December 2013

Chairman’s Article: Dear Members: This month’s issue of the NIBA newsletter focuses on the topic on everyone’s mind — the CME Group market data fee increases. Not surprisingly, none of our members are happy about it. Some even say that added to the industry problems of the past two years, this could be the last straw for their business. On December 2, 2013 the NIBA Executive Board of Directors took your comments and suggestions to a meeting with the CME Group market data team. The points we emphasized are: The size of the fee increase as announced. The definition of…...

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Market participants perspective on CME Market Data Fee Increase

The purpose of this letter is to express an opinion regarding the CME’s announcement to increase its market data fees.  Market participants, professional users and brokers alike are largely unaware of what the CME intends to do and how much of an impact it will have on their trading activities and respective businesses.  It should be noted that from a broker’s perspective it is understood that real time access to market data is not something that is expected to be at no charge.  Brokerage firms and traders are willing to pay for real time access, however the fees associated with…...

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Taking Your Questions on New CME Group Market Data Fee Structure for Discussion with CME Group

NIBA Members: You may have received a direct communication from the CME Group or read recent National Introducing Brokers Association (NIBA) LinkedIn posts regarding the exchange’s intent to raise market data fees. As the new policy is currently written, it will affect each of us and our customers. The NIBA has requested a face-to-face meeting with the CME Group in order to better understand their action and more importantly — to express our members’ concerns. We need your input. Please review the CME Group announcement and related links below: CME Group 2014 Fee Changes Summary CME Group 2014 Fee Changes Advisory Notice…...

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NFA Board of Directors IB & CTA Representatives panel

It was my privilege to moderate what I think was the most interesting presentation during the NIBA September Conference. I moderated the NFA Board of Directors IB & CTA Representatives  panel. Paul Georgy, GIB, Jeff Malec, IIB, James Koutoulas, CTA and John Roe, CTA all spoke to a packed audience of the NFA registrants they represent. All four panelists are NIBA members. The  session focused on what NFA IB and CTA representatives do and what they hope to accomplish through their participation on the NFA Board. Paul Georgy has served as the representative for GIBs for several years. He pointed…...

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Five Ideas of CTA Due Diligence Part 2

In Part 1 of the article Five Ideas of CTA Due Diligence, we discussed several foundational concepts to keep in mind when applying a research due diligence process to a Commodity Trading Advisor.  At the heart of a due diligence process is to understand as much about the manager as possible. A couple of years ago I met a journalism professor and I mentioned the students in my graduate level managed futures course at DePaul University write due diligence papers on managers. He said the due diligence process is very similar to how he teaches his investigative journalism students. Until…...

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Advice for Brokers Selling CTAs

1. Don’t sell anything, ever, that doesn’t have an audited Track Record. If you are selling unaudited investment managers, you are selling fantasy. 2. Don’t sell anything you don’t understand. That’s how people got involved with Madoff. 3. Don’t sell anything you don’t own. Have your lawyer check your contract with your CTA. If it isn’t bullet proof, if you aren’t 100% certain of getting paid, then expect to get cheated. 4. Own the costs and benefits you add to your investment managers. You are adding cost. So, you need to find ways to add value. For example, if you…...

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Takeaways from the Due Diligence for IBs using CTA Programs Panel

The recent NIBA Conference panel Due Diligence for IBs using CTA Programs proved to be a lively discussion with strong input from the conference participants, which included both CTAs and IBs currently marketing managed futures programs.  A short list of takeaways from the discussion: While CTA databases provide a lot of information on CTAs an IB should verify on their own database information. A CTA should have a 13-column spreadsheet and a completed due diligence questionnaire.  They are industry standard.  If they do not, it is a red flag. More and more CTAs are getting their track records audited. Entering…...

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