Archive for the ‘Seg Funds’ Category

A Quick Look at MBF

April 10, 2013

MBF never had Customer Seg funds in the period I looked at below. The firm’s net capital requirements was never greater than the FCM minimum of $1,000,000 as required by CFTC. I don’t know why the firm de-listed as an FCM.

Source for the details below is here: http://cftc.gov/MarketReports/FinancialDataforFCMs/index.htm

June, 2013
Customer Assets in Seg: $0
Customer Seg Required: $0
Adjusted Net Capital: $1,311,027
Net Capital Required: $1,000,000

July, 2013
Customer Assets in Seg: $0
Customer Seg Required: $0
Adjusted Net Capital: $2,362,149
Net Capital Required: $1,000,000

August, 2013
Customer Assets in Seg: $0
Customer Seg Required: $0
Adjusted Net Capital: $2,099,107
Net Capital Required: $1,000,000

September, 2013
Customer Assets in Seg: $0
Customer Seg Required: $0
Adjusted Net Capital: $1,960,067
Net Capital Required: $1,000,000

October, 2013
Customer Assets in Seg: $0
Customer Seg Required: $0
Adjusted Net Capital: $1,872,412
Net Capital Required: $1,000,000

November, 2013
Customer Assets in Seg: $0
Customer Seg Required: $0
Adjusted Net Capital: $1,623,543
Net Capital Required: $1,000,000

MBF was deleted from the CFTC FCM Data Report in December 2012.

An 11-Year History of CFTC FCM Data

January 17, 2013

UPDATE: I am adding a zip file that contains the CFTC FCM Data reports, sorted by Customer Seg Funds. CFTC FCM Data Nov 11 years

A few weeks ago, just by chance, I took a look at a few of the old CFTC FCM Data reports that are archived on CFTC’s website. At the time I noted that there were many fewer FCMs reporting Customer Segregated Funds in 2012 than there were in previous years, at least at the reports I looked at on a spot-check basis. I decided at that time that over the holiday season I’d take a closer look at the numbers, in a more organized way that just randomly spot-checking them. Frankly, based on a very preliminary spot-check, I expected to see a long, steady decline in the number of FCMs clearing customer business.

Earlier this week (January 14th) a comment on the John Lothian Newsletter prompted me to think more about this.

“**JK – Key stat in this story: The number of FCMs registered with the CFTC has fallen 33 percent since 2008.”

Then the CFTC published the November, 2012 FCM Data report and I figured the time was ripe for a new blog post.

So, I took the November month-end data for each report over the last 11 years and assembled the the information below. Some interesting things I found:

– while there may be a reduction of 33% in the number of FCMs registered at CFTC, the number of them clearing customer business has remained the same for the past 3 years (November-over-November).

– the number of FCMs clearing customer business was actually higher in November 2012 than it was in November 2009.

– longer term, the number of FCMs clearing customer business is down more than 30%, even while the amount of Customer Segregated Funds has nearly tripled.

– the highest level of Customer Seg Funds was reported in November 2008, after which the amount dropped roughly 17%, but the amount of Cust Seg reported since then has been steadily rising, despite the market-shuddering MF Global and Peregrine events.

– fewer FCMs overall, and especially fewer FCMs clearing customer business, mean less choice for customers, and probably mean less innovation for clearinghouses and few opportunities for vendors (and consultants).

I’d argue that these results, which I admits surprised me, provide evidence of a stronger U.S. futures market than some claim. Certainly, volumes are down today from recent historic highs. But the amount of money being stored in Segregated accounts is not as anemic as I had expected to see. And the number of FCMs clearing customer business has remained steady over the past three years, though definitely at lower than historic levels. For well-heeled futures traders, this seems like a positive trend. For smaller retail futures traders and small hedgers, fewer FCMs on the customer side is an ill wind. But overall, I’d think that, despite MF Global the Wasendorf scandal, these numbers are indicative of a relatively healthy U.S. futures market.

When you look at these numbers, what seems compelling to you?

I am using just November data for the past 11 years. (That’s what exists on the website as of this writing.) I might delve into November-over-November numbers further in the future, but as a starting point I’m just using November month-end data as reported to CFTC.

2012 November:
Number of FCMs reporting Customer Seg Funds: 70
Total Amount of Customer Seg Funds: $157,547,596,681

2011 November:
Number of FCMs reporting Customer Seg Funds: 70
Total Amount of Customer Seg Funds: $149,071,676,345

2010 November:
Number of FCMs reporting Customer Seg Funds: 70
Total Amount of Customer Seg Funds: $148,865,958,243

2009 November:
Number of FCMs reporting Customer Seg Funds: 65
Total Amount of Customer Seg Funds: $139,182,038,261

2008 November:
Number of FCMs reporting Customer Seg Funds: 74
Total Amount of Customer Seg Funds: $166,558,495,345

2007 November:
Number of FCMs reporting Customer Seg Funds: 86
Total Amount of Customer Seg Funds: $128,465,965,699

2006 November:
Number of FCMs reporting Customer Seg Funds: 93
Total Amount of Customer Seg Funds: $110,095,575,975

2005 November:
Number of FCMs reporting Customer Seg Funds: 94
Total Amount of Customer Seg Funds: $95,497,405,299

2004 November:
Number of FCMs reporting Customer Seg Funds: 97
Total Amount of Customer Seg Funds: $83,117,537,566

2003 November:
Number of FCMs reporting Customer Seg Funds: 102
Total Amount of Customer Seg Funds: $67,149,211,221

2002 November:
Number of FCMs reporting Customer Seg Funds: 102
Total Amount of Customer Seg Funds: $55,016,148,023

CFTC FCM Data Report for September Released

November 13, 2012

Time for another look at the Customer Segregated Funds figures. CFTC compiled the data submitted by FCMs (1-FR reports) and from broker/dealer FOCUS reports. The data from September 30th, compiled by CFTC in the interim and published last week.

CFTC Report Page.

I take the CFTC report and sort it report by column J – customer segregated funds required. The sorted report is behind this link.

The top 5 comprise 53% of all Customer Seg Funds. All are FCM-Broker/Dealers.

Goldman
JP Morgan Securities
Newedge
Deutsche Bank Securities
UBS Securities

The top 5 above along with the next five comprise 77.3% of all Customer Seg Funds. Again, all are FCM-B/Ds. The second five are:

Citi
Merrill Lynch
Morgan Stanley
Credit Suisse Securities
Barclays Capital

The first FCM (non-B/D) is R.J. O’Brien, at 11th.

More later….

U.S. Futures Customers Pulled $10 Billion Out of the Futures Market

September 13, 2012

As many know, the CFTC publishes a list of U.S. futures commission merchants (FCMs) and the amount of customer money they have in their Segregated U.S. Funds bank balances. Today they published the list for month-end July, 2012, to their website.

The CFTC report comes from the FCM’s CFTC 1-FR reports, which are part of the SEC FOCUS report if the FCM is also a broker/dealer in U.S securities. If the FCM is not also a broker/dealer registered with the SEC, then they submit just the 1-FR to CFTC.

Here is the latest report from CFTC: Latest CFTC Report

Here is the same list, sorted by FCMs’ Customer Segregated Funds balances. fcmdata0712-sorted-by-Seg

There is a lot of interesting information and data in the report: RJ O’Brien is the largest FCM in the U.S. as measured by Customer Seg, that is not also an SEC-registered broker/dealer in U.S. securities, for example. Another example: 8 of the top 10 names on the list all use the same vendor back-office system. There are 69 FCMs that reported Customer Seg to SEC and/or CFTC. (There were 71 as-of last October, when MF Global turned on their money vaporizer; there were 70 until Peregrine went down.)

But that’s not the most interesting thing to me. To me, the most revealing thing about the current report is this: In June of 2011, 13 months ago, FCMs in the U.S. reported a cumulative $153,881,560,188.00 in Customer Segregated Funds. (I used the CFTC report from that date to generate this post, where the data was sorted: June 2011 Sorted Data.

Today’s report from CFTC shows a cumulative Customer Seg figure of $143,561,983,577.00.

That means that customers of U.S. FCMs have pulled $10,319,576,611 out of their FCMs in the past 13 months of CFTC reporting.

Even if one assumes that MF Global lost/stole/vaporized $1.6 billion and that Russ Wasendorf at Peregrine stole another $200 million, there is still a full $8 billion-plus that customers of FCMs took out, entirely on their own.

FCM customers have options: ETFs, mutual funds, stocks (with SIPC protection), etc. It looks like many are utilizing the options, and departing the futures industry.

FCM Data – May 31 Report from CFTC

July 13, 2012

By now most folks know that Peregrine Financial Group, variously called PFG or PFGBest, has gone belly up amid allegations of the theft of $220 million dollars of customer money. The company’s sole owner was found by employees parked behind the corporate HQ in Cedar Falls, IA with a hose running from his exhaust pipe to the passenger seats of his car. He has survived. There are reports of a suicide note that talks of “financial irregularities.”

Today the CFTC released the monthly FCM Data report of Customer Segregated Funds (and 30.7 Secured Funds). Peregrine is on the list, at #38, having reported $371,453,743 as the firm’s Seg Requirement, and reporting $376,523,865 as Customer Seg on hand. This means the firm reported a $5,070,122 excess in their Seg balances. It is interesting to note the PFG is on this list, when MF Global was removed from the list on the first report after their bankruptcy last October 31.

Of course, now we know that these reports, for Peregrine, were falsified. Reports are that they told regulators that the firm had some $220 million in a Segregated bank account, but regulators (NFA, the National Futures Association) have been told by the back that there was less than $10 million on hand.

According to the NFA’s Member Responsibility Action (MRA) this has been going on for at least two and a half years.

The CFTC releases the report sorted by FCM, alphabetically. I usually sort the data by Seg amounts. Here is a link to the CFTC FCM Data Report, sorted by Customer Segregated Funds Required (column J).

fcmdata0512-xls Sorted By Seg