July 25, 2016

Happy to report: as of Friday’s close of business, users of the Ffastfill Consulting OCR Toolkit have reached a milestone.

More than 10,000 production OCR forms have been submitted to regulatory departments at U.S. exchanges: CME, ICE-US, ICE-EU, NFX, Nodal Exchange and, as of Friday, CBOE Futures Exchange too.

So while CFTC still delays – previous go-live was last September 29th, which was later delayed another six months – the exchanges allowed firms to submit production OCR forms September 29th, 2015. In the 10 months since, OCR Toolkit users have submitted 10,022 production forms.

That’s more than 10,000 forms that didn’t need to be manually prepared by compliance teams at Reporting Firms. And more than 10,000 forms that didn’t need to be manually entered and/or imported by exchange surveillance teams.

10,000 forms, automatically generated, delivered, and consumed.

Automation. For the win.

Needham Consulting News

June 9, 2016

Just to keep everyone in the loop, here is some news about Needham Consulting, and me.

Effective immediately, I am putting Needham Consulting on hiatus. I have signed a full-time employment agreement with Ion Trading.

I will continue to do what I’ve done all along: work with derivative industry participants on the challenging issues that face the industry.

But now I can do that under the umbrella of the leading software vendor in the derivatives space.

I am excited about this new opportunity, and I look forward to what comes next, both for me and for Ion.

And to the clients of Needham Consulting: with a humble and grateful heart, I want to simply say thank you. I have had more fun, and more interesting work, than I ever thought possible when I started this little enterprise eight years ago. None of that would have been possible without your belief in me. I will always be thankful for that. And I look forward to maintaining those connections with you, under Ion, in the years to come.

John Needham


FCM Financial Data Reports – Feb 2016

May 9, 2016

By now everyone knows the routine:

  • CFTC publishes FCM Financial Data based on FCM 1-FR Reports and broker/dealer FOCUS Reports
  • I grab the spreadsheet version from there, sort the data by meaningful columns like Customer Segregated Funds Required (column J in this case)
  • Then I upload the updated spreadsheet here.

The February 2016 FCM Financial Data Report was just published by CFTC.

Interesting tidbits:

There were 55 FCMs that reported Customer Seg Funds required in February, 2016. That’s the same number that cleared customer business as of December 31, 2015.

Just 25 of them hold more than $1B in Customer Seg, though. Just five FCMs hold more than $10B. Those are Goldman, JP Morgan, SocGen, Morgan Stanley and Merrill Lynch.

Goldman has more than $6B more Customer Seg money than 2nd-place JP Morgan does.

More than half, or 51.62%, of Customer Seg money is held at the top-5 FCMs. Almost three-quarters, or 73.66%, is held at the top-10 FCMs.

The Customer Seg total in Feb 2016 was $157,006,070,162. That’s up roughly $9B from December 2015.

So while the Seg Funds figures continue to rise – meaning, more customers, futures-users, are clearing business at FCMs, the number of FCMs is not increasing, yet. Hopefully more firms will enter or re-enter the US futures industry.

Until then, despite increasing demand, customers’ choices will continue to be limited to the existing market participants.



2015 Year-End FCM Financial Data

February 11, 2016

Attached here is the CFTC’s Financial Data report for FCMs, sorted by Segregated Funds Required: fcm-data-2015YE-sorted-by-Seg-xls

As we’ve discussed here before, FCM consolidation (Wedbush, Crossland, Knight, etc.), executive malfeasance and criminal activity (MF Global and Peregrine), and lousy economic times (Jefferies) have led to fewer and fewer clearing members that are willing to clear FCM customer business.

We are now down to just 55 clearing firms in the U.S. that are carrying and reporting Customer Segregated Funds. The amount of Customer Seg assets held by FCMs at the end of 2015 was  $148,435,860,345.00. There were 72 FCMs registered at CFTC at the end of 2015.

By contrast, just five years ago, 71 U.S. FCMs were clearing customer business, and the amount of assets held in Seg was $151,055,523,757.00:  fcm-data-2010YE-sorted-by-Seg-xls At that time, 122 FCMs were registered with CFTC.

Talk about concentration risk: roughly the same amount of Customer Seg assets held at roughly 25% fewer clearing firms.

And ten years ago, when just $94,204,546,290.00 was held in Customer Seg accounts, there were 94 FCMs clearing customer business, and there were 178 FCMs registered with CFTC: fcm-data-2005YE-sorted-by-Seg-xls

People talk about exchange volumes, and exchange revenue, how high the volumes are, how robust trading revenue is,  and cite this as evidence that the U.S. derivatives industry is healthy and growing.

In my view, they’re looking at the wrong metric.


FCM Data – November 2015

January 8, 2016

Well, here is the latest FCM Data and provided by the U.S. Commodity Futures Trading Commission, or CFTC.

By now you know the drill: CFTC publishes the FCM Financial Data on their website. I download the spreadsheet, sort it by Customer Seg Funds, and upload it here.

So, as discussed before: fewer and fewer FCMs are clearing customer business. Jefferies has wound down the customer portion of their FCM business as they continue to wind down the FCM, taking the venerable Bache and Prudential Bache names with it.

Currently there are 55 FCMs clearing customer business, but that will drop to 54 once the Xchange Financial Access FCM winds down, as it was ordered to do by NFA in that organization’s infinite wisdom.

In December 2013 there were 69 FCMs that reported Customer Seg. A list of them is here.

This sick trend continues apace, except when it periodically accelerates.


FCM Data – August 2015

October 12, 2015

Ahead of FIA Expo – I’ll be in Chicago for it next month – I figured this was as good a time as any to post another sorted summary of the CFTC FCM Financial Data reports. Sourced from here, you already know the drill, no doubt: CFTC publishes the report every month based on FCM/Broker Dealer FOCUS Reports, and/or FCM 1-FR reports.

CFTC publishes the report listing FCMs alphabetically, I grab their Excel version and sort it by Customer Seg Required (Column J). The amount of money in Customer Seg – aka Seg Required – is a pretty reliable and useful measure of the relative health of the US derivatives industry.

The sorted report is here: fcmdata0815 Sorted By Seg

Tops is Goldman Sachs, at a little under $24 billion. That’ roughly 25% higher than the second largest amount in Seg Required, JP Morgan at $17.2B. Third is SocGen (formerly Newedge) at $13.8B, then Morgan Stanley at $12.5B, and fifth largest is Merrill Lynch (BAML) at around $12.4B.

Relevant: there are 73 FCMs that submitted reports to CFTC, but only 56 of them had any Customer Seg amounts at all. And one of those – Jefferies (formerly Prudential Bache, before that Bache Securities) is winding down, so soon, there will be just 55 FCMs from which derivatives customers can choose.

Anyway, that’s it for now. If you’re in Chicago, or traveling there for FIA Expo, look for me on the trade show floor, or at some of the panels!

FCM Data – April 2015

June 10, 2015

By now you know the drill: CFTC publishes FCM data from the FCM 1FR reports, or from the broker/dealer FOCUS reports, every month. Every once in a while I download the CFTC report from here and re-sort the report by Customer Segregated Funds Required (Column J).

The report sorted by Customer Seg Req’d is here.

In July, 2014, the total Customer Seg reported by FCMs was $148,214,002,848.

In April, 2015 the total was $149,913,404,903, up a little bit.

The top five FCMs carry 51% of the Customer Seg, those FCMs are Goldman, JP Morgan, SocGen (formerly Newedge), Merrill Lynch and Morgan Stanley.

Add in the next five FCMs are the top-10 carry 74% of the Customer Seg balances. Rounding out the top-10 are Credit Suisse, UBS, Citi, Barclays, RJ O’Brien.

23 FCMs carry more than a billion dollars in Customer Seg, ranging from Goldman ($22B) at the high-end, to the winding down Jeffereis at the low end (just under $1.5B).

Just 57 FCMs reported any Customer Seg balances at all. That’s down six from just last July. And it is down more than 40% in the past 10 years.

I spoke about this a little more than a year ago at the FTF Derivops Conference in Chicago. At year-end 2003, 177 FCMs submitted FOCUS/1FR reports to CFTC. Ten years later, at year-end 2013, just 102 did. By April 2015, that number had dwindled to just 75.

At year-end 2003, 102 FCMs reported to CFTC that they cleared customer business (Customer Seg balances) At year-end 2013, just 69 did. By April 2015, that number had dwindled to just 57.

These are awful numbers, it is an awful trend.

What are your thoughts?

2014 Year-End Customer Seg Figures

February 26, 2015

I’ve been away for a bit, but I saw when I was out that the CFTC published the FCM Financial Data report for December, 2014, so I figured I’d create a post and compare some of the high-level figures to the 2013 year-end report.

CFTC FCM Data Report Page

And here is the December 2014 report sorted by Customer Seg.


Total Customer Seg reported was $136,456,771,305. That’s down almost $7B from the 2013 year-end figure of $143,741,158,888. In 2012 the total Customer Seg report showed $145,900,203,492.

Only 66 FCMs reported Customer Seg balances in December 2013. 69 FCMs reported Customer Seg in December 2013.

The top-5 in 2014 were:

Goldman Sachs at $20,285,919,590
JP Morgan at $17,447,852,777
Merrill Lynch at $11,208,908,563
Morgan Stanley at $10,031,840,202
Deutsche Bank at $9,773,050,189

Goldman and JPM were the top-2 in 2013, followed by Newedge (now called SG Americas and not reporting any Customer Seg; confusing, that), Deutsche and Morgan Stanley.

I do wonder what happened to SocGen’s report. The December 2014 report list Newedge among the deletions, and lists SG Americas Securities as an addition, but SG Americas reported zero in Customer Seg in the list above, sorted by Customer Seg Required.

November 2014 FCM Financial Data

January 18, 2015

By now you all know the drill: the CFTC publishes monthly financial data for FCMs, or futures commission merchants. Every once in a while, I download the spreadsheet and sort it by Customer Segregated Funds, which I consider among the most useful measures of the relative health of the U.S. futures market.

Then I post the sorted report here, mainly for my own reference, but for yours, too, if you want. Since the FIA Divisions Meetings are this week in Florida, and since CFTC published the latest report this past week, I figured this was a good time to post a fresh update.

Here is the November, 2014 data.

See anything interesting in the report?


– JPM is tops, as measured by Customer Seg. GS is second. GS was first last month, with JPM second.
= DB is 5th, with $10.5B; the top five all have more than $10B. Morgan Stanley is 6th, at $9.9B.
– 25 FCMs have more than $1B in Customer Seg.
– Only 59 US FCMs reported Customer Seg, and the last, LEK Securities, had less than $1MM.

CFTC FCM Financial Data Report – July, 2014

October 13, 2014

Ahead of next month’s FIA Expo in Chicago, I figured it would be a good time to take a fresh look at the CFTC’s monthly FCM Financial Data report. I admit that I haven’t looked at it for some time – the last time I posted anything here about it was back in February for the 2013 year-end report. (A link is here.)

So, refreshing: the CFTC data is published here: CFTC Link.

I saved the spreadsheet version of the CFTC report and then sort the FCM list by categories.

fcmdata July 2014 Sorted by Seg Required

fcmdata July 2014 Sorted by Secured Required

And new this time, I learned from this review that since my last peek, CFTC has started including Swaps Seg Funds required:

fcmdata July 2014 Sorted by Swaps Seg Required

So, a quick look at the numbers, compared to 2013 year-end:

Customer Seg Required totals:
July 2014: $148,214,002,848
December 2013: $143,741,158,888

A small increase of $5B.

The top 5 FCMs measured by Customer Seg were:
Goldman Sachs $18B
JP Morgan $17.3B
Deutsche Bank $$12.4B
Newedge $12.1B
Morgan Stanley $10.6B

Those five firms hold 47.65% of all the Customer Seg Funds.

The next 5 FCMs are:
Merrill Lynch $10B
Credit Suisse $8.8B
UBS Securities $7B
Barclays $6.2B
Citigroup $5.3B

Those top-10, all in, hold 73% of all the US Customer Seg Funds Required.
There were 63 firms that reported Customer Seg on their July 2014 FOCUS (or FCM 1-FR) reports. That’s down SIX FCMs from the December 2013 year-end reports.

Customer Secured Required totals:
Total Secured Funds (or 30.7) Required in July 2014 was $31,721,736,168.

The top 5 FCMs measured by Customer Secured were:

Goldman Sachs $7.2B
Barclays $3.4B
UBS Securities $3.3B
Newedge $3B
JP Morgan $2.9B

Those five firms hold 62.8% of all the Customer Secured Funds.

The next 5 FCMs are:
Credit Suisse $2.6B
Merrill Lynch $2.6B
Morgan Stanley $2.1B
Deutsche Bank $1B
Citigroup $931MM

Those top-10, all in, hold 92.6% of all the US Customer Seg Funds Required.
There were 53 firms that reported Customer Secured on their July 2014 FOCUS (or FCM 1-FR) reports.

Finally, the Customer Swaps Seg Required totals:
Total Swaps Seg Funds Required in July 2014 was $37,573,414,231.

Since there were only 22 FCMs/BDs/SDs that reported these funds, and since this is the first time I’ve looked at this, all the firms, their reported amounts, and the percent of the totals are listed below:

1. Credit Suisse $7,583,982,994 (20%)
2. Barclays $5,824,094,747 (15.5%)
3. Citigroup $5,475,668,782 (14.5%)
4. Morgan Stanley $4,633,503,266 (12.3%)
5. JP Morgan $4,010,710,065 (10.7%)
6. Goldman Sachs $2,353,995,394 (6.3%)
7. Merrill Lynch $2,065,002,087 (5.5%)
8. Wells Fargo $1,509,345,655 (4%)
9. Deutsche Bank $1,502,136,236 (4%)
10. UBS Securities $829,082,727 (2.2%)
11. HSBC $522,398,676 (1.4%)
12. Newedge $422,435,013 (1.1%)
13. BNP Paribas Securities $370,185,150 (1%)
14. State Street $315,334,914 (0.8%)
15. Mizuho $43,755,732 (0.1%)
16. Jefferies $41,203,000 (0.1%)
17. RBS $39,683,871 (0.1%)
18. Nomura $24,047,555 (0%)
19. Macquarrie $3,316,120 (0%)
20. ADM $2,687,874 (0%)
21. BNP Paribas Brokerage Services $731,813 (0%)
22. CHS Hedging $112,560 (0%)