Archive for the ‘Uncategorized’ Category

2016 Year-End FCM Financial Data

February 3, 2017

Attached here is the CFTC’s Financial Data report for FCMs, sorted by Segregated Funds Required: 2016 Year-End CFTC FCM Fin’l Data

For comparison’s sake, linked here is the same report from 2015 year-end.

What we’ve learned:

  • there were just 65 FCMs registered at CFTC as of 2016 year-end; in November 2016 there was 66 (State Street has left); there were 75 FCMs registered with CFTC at the end of 2015.
  • there were 55 U.S. FCMs who cleared customer business at the end of 2016, the same number as there was at the end of 2015.
  • the amount of Customer Seg assets required jumped, year-over-year: in December 2015, there was $148,435,850,345 in Customer Seg; in December 2016 that figure jumped to $160,295,996,895, or roughly $12 billion more assets in Customer Seg. That’s an increase of 8%, which is encouraging.
  • The concentrations at the top remain largely unchanged:
    • in 2015, 51.58 of the Customer Seg funds were held at the top five FCMs (Goldman, JP Morgan, SocGen, Morgan Stanley and Merrill Lynch); in 2016 that figure was 52.69%
    • in 2015 the top 10 FCMs held just over 73% of the Customer Seg funds; in 2016 that figure was just under 74%.

Summary: the rising amount of Customer Seg funds being traded in the U.S. is a positive sign; I think that the concentration among just ten FCMs is a cause for worry. I also think that the dwindling number of FCMs is a cause for genuine alarm.

I’d be interested in learning your thoughts, though, too. So drop them in the comments.




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 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!

FTF News Chicago DerivOps Conference – April 1, 2014

April 2, 2014

I’ve said this before, here and elsewhere, that I’ve been a great admirer of FTF News for some time. The team at FTF is great at what they do: new aggregation and curation, tremendous original content, and conferences and events in New York, Chicago and London.

Today FTF held their Chicago DerivOps conference. I was honored to chair the event, and to moderate a panel on FMCs with Yvonne Downs from Jefferies, Max Itkin from Pentwater Capital and Rajeev Ranjin from the Chicago Fed. The full conference agenda is here.

As conference chair, I was able to deliver some opening remarks. As I do sometimes, I selected the topic of FCM data, as published by CFTC, as a topic on which to focus. The opening remarks are pasted below, but full disclosure: I pretty much strayed from the text and spoke extemporaneously. I was supposed to talk for 5 to 10 minutes. I had to cut myself off when the clock counted down from 15 minutes to zero.

The lineup was, as always, terrific. I was proud to be able to contribute to the event. My guess is that most attendees got a lot out of it. I certainly did.

My comments:

I want to start by thanking all the fine folks at Financial Technologies Forum – my friend Maureen Lowe, Katie Flanagan, Eugene Grygo, Liz Acury, and the rest of their team. I’ve been fortunate to be a part of this DerivOps conference for a couple of years now, it really is one of the best conferences in Chicago. And I’ve been a big fan of Maureen and the rest of the folks at FTF. If you’re not engaged with this team – on Twitter, in their LinkedIn group, on their website, well, I’d strongly encourage you all to do that. They are excellent at what they do – the content aggregation and curation, the original content they are producing, it is all really terrific stuff. Trust me when I say this, you should be engaged with them in the many ways they are available -it will help you professionally in ways that will surprise you.

I want to thank the sponsors of today’s event: TriOptima, LCH Clearnet, Tradeweb, Options Clearing Corp and Omgeo, Lombard Risk, Misys, Simcorp and MarketAxess. Without these sponsors this event would not be possible, thank you all for participating. And to the attendees, be sure to visit with them during the breaks today – they have a lot to offer in the FinTech space, you should take some time to see what innovations these sponsors are bringing online in the recent past and for the rest of 2014.

Finally, I want to thank all of you, our attendees. Obviously, the purpose of the event, the reason we’re all here, the sponsors, FTF, all the panelists and speakers, is for you. I’m sure you’ll get a lot our of today’s event.

We have an excellent lineup: In a few minutes we’ll get started with a roundtable on SEFs – Swap Execution Facilities, those brand new regulated platforms on which OTC swaps are required to be traded, born out of the Financial Reform Bill that we all know as Dodd-Frank, The moderator for this panel is John McPartland, the Senior Policy Advisor at the Federal Reserve Bank, a fellow I first met a few years ago here at the FTF DerivOps conference in Chicago. Pay attention to this panel, folks – McPartland is one of the really great minds in trading and clearing policies, and he has a top-notch lineup with folks from LCH Clearnet, Citi and Tradeweb.

After a short break we’ll have a presentation by Mary Harris from TriOptima on portfolio reconciliation, and after that we’ll have a panel on Collateral Management, moderated by Larissa Miller, founder of Stuart Investments and a professor at IIT, with panelists from Northern Trust, Nuveen and she’ll have Ted Levroni from Omgeo.

After lunch I’ll be moderating a panel on FCMs – we’ll be touching on some of the points from this morning’s panels, and looking at some of the criteria that firms can and should use to help them choose clearing firms for the OTC and exchange-traded derivatives activity. This panel includes Max Itkin, head of Ops at Pentwater Capital, Yvonne Downs, Chief Operating Office at Jefferies, and Rajeev Ranjin, a policy specialist at the Chicago Fed.

Following that we’ll have a panel on Global Reg Compliance, moderated by Michael Sackheim from the law firm Sidley Austin, with panelists from Gladius Capital Management, the FCM Straits Financial, and with Gavin McConville from Lombard Risk.

That panel will be followed by a presentation Risk and Reconciliation in the derivatives market, by Maan Bsat from Misys.

We’ll wrap thing up this afternoon with a panel moderated by Larissa Miller from Stuart Investments and IIT, the topic there will address how firms can cope with the new rules and requirements for clearing. Larissa will have Joe Corcoran from OCC, Kevin Walker from Nuveen, and Joe Kamnick, a director at the SEC, who is really sharp and who was on one of my panels at last year’s conference. He’s a great guy and a really good sport. We were a little hard on him last year, as a representative of one of the market regulators, but he came though that okay. The proof is that he is back again this year. I’m looking forward to hearing what Joe has to say.

Let me wrap up my comments with a few stats, some raw numbers to keep in the back of your mind as you speak to the sponsors, as you listen to the speakers, as we go through the day. People often refer to the explosion of exchange volumes as a sign of robust health and growth in the US Capital markets. They often make the same case when talking about outstanding notional amounts for the swaps market. My own suspicion is that volume alone, or outstanding notional amount alone, only tells part of the story. Certainly volume figures are indicative of exchange and clearinghouse health, but I’m not sure that the same can be said of the overall health of the US financial markets.

As you all know, FCMs and broker dealers are required to submit, to CFTC, FOCUS reports, or FCM 1FR forms if they’re not a broker dealer, and the CFTC uses these reports to produce their FCM Financial Data reports every month. There is an extensive archive of these reports at CFTC’s website: These reports have a ton of useful information that anyone can review, and can use to draw some conclusions about the relative health of the US futures market, and by extension, the US swaps market, the US securities markets, and the US financial world in general.

Since the focus of my consulting practice is mainly in the FCM back-office technology world, I look at these reports pretty often. In preparation for this years DerivOps conference, I took a look at the year-end reports for 2013, posted by CFTC in February, and year-end from 10 years before, in 2003. As one might expect, the pure raw figures provided by CFTC show some positives and some negatives.

For example: in those 10 years, between 2003 and 2013, the amount of US Customer Segregated Funds more than doubled – from a little over $71 million in 2003, to $143.7 million in 2013. That is a clear sign of outstanding growth. And it is worth noting that during this period, the US and the global economy went through staggering upheaval: from the collapse of the US housing market, the global recession, the international credit crisis, the collapse of Lehman and Bear Stearns, the bankruptcy of what was then one of the top-10 FCMs in the US – MF Global, and all the attendant upheaval from that – missing customer money, accusations of mismanagement and malfeasance. MF Global’s collapse was followed in short order by the revelations out of Cedar Falls Iowa that Russ Wasendorf had stolen more than $200 million of his own customer’s money to fund his lavish lifestyle and to fund his divorce settlement with his ex-wife. Russ Wasedorf’s actions led to the demise of a mid-tier FCM called Peregrine Financial, or PFG Best, as it was rebranded.

Fun Fact, as an aside: in the months just after MF Global failed, US customers took more than $10 million out of the US Futures Markets. That sounds like a mind-bogglingly large figure, but at the time, it was only one-fifteenth of the total ledger balance of what was then around $153 million in US Customer funds.

So that’s some good news. Here is some news that might be considered less-good:

Between 2003 and 2013, the concentration of US Customer Seg at the top end of the spectrum has grown. In 2003, the top-5 FCMs had 41.7% of the total reported Customer Seg, and the top-10 had 65% of the Seg Funds reported. By 2013, the top-5 reported 49.6% and the top-10 had 75% of the US Customer Seg balance. That’s right, as of December 2013, more than thee quarters of all the US Customer Seg funds were held at just 10 FCMs.

I’ll leave it to others to decide whether that is a sign of health in the US futures industry. But here are some figures that I, and many others, consider definitely bad news.

In 2003, 177 FCMs submitted FOCUS reports or FCM 1FRs to CFTC. In 2013 only 100 did.
In 2003, 102 FCMs reported that they held Customer Seg funds to CFTC. As of December 2013, just 69 FCMs reported that they are clearing Customer Seg.

So in ten years, while the amount of Customer Seg more than doubled, we’ve seen a decrease of roughly 30% in the number of FCMs, and in the number of FCMs who clear customer business. In oder to promote a healthy, robust, vibrant US capital market, that is a trend that I think we should all commit ourselves to reversing.

With that said, with those figures fresh in your mind, let’s get started with today’s program. First up is the roundtable on SEFs, so I’ll turn the dais over to a man I greatly admire, John McPartland from the Chicago Fed.

If you were at the event, drop a comment in below and let me know what you thought of it, or e-mail me at my G-Mail address and say hello. (You can find the G-Mail address on my Twitter profile, my LinkedIn profile, the Needham Consulting Facebook Page, or my Google+ profile page.

2013 Year-End FCM Financial Data Report

February 16, 2014

Here are the 2013 results from the CFTC report on financial data for U.S. FCMs. The ORIGINAL source is here: CFTC Financial Data for FCMs

The same data sorted by U.S. Customer Seg required (FCM Data 2013 Year-End) is posted here. (Downloads as an Excel spreadsheet.)

For perspective, the same data (sorted by U.S. Customer Seg required) for year-end 2012 is posted here: (FCM Data 2012 Year-End) 2012 Year-End Results. (Also downloads as an Excel spreadsheet.)

The Details

The TOTAL US Customer Seg amount reported in 2013 was $143,741,158,888, compared to a 2012 amount of $145,900,203,492, down almost $2.15 billion. or roughly 1.5%.

Following is a list of all US FCMs that reported Customer Seg requirements in their December 2013 reports to CFTC.

1. Goldman Sachs – 1st in 2013, 1st in 2012, 2013 Seg required was $19,505,062,033 down about $600 MM.

2. JP Morgan Securities- 2nd in 2013, 2nd in 2012, 2013 Seg required was $16,068,072,825 down more than $2 B.

3. Newedge – 3rd in 2013, 3rd in 2012, 2013 Seg required was $13,164,428,650 down about $1.7 B.

4. Deutsche Bank – 4th in 2013, 4th in 2012, 2013 Seg required was $12,402,354,155 UP about $1.5 B.

5. Morgan Stanley – 5th in 2013, 7th in 2012, 2013 Seg required was $10,233,308,793 UP about $1.3 B.

6. Merrill Lynch – 6th in 2013, 8th in 2012, 2013 Seg required was $10,097,450,250 UP about $3 B.

7. UBS Securities – 7th in 2013, 5th in 2012, 2013 Seg required was $8,191,731,999 UP about $400 MM.

8. Credit Suisse – 8th in 2013, 9th in 2012, 2013 Seg required was $7,918,920,731 UP about $1.4 B.

9. Barclays Capital – 9th in 2013, 10th in 2012, 2013 Seg required was $6,377,915,171 UP about $170 MM.

10. Citigroup – 10th in 2013, 6th in 2012, 2013 Seg required was $4,844,742,715 down about $2.8 B.

11. RJ O’Brien – 11th in 2013, 11th in 2012, 2013 Seg required was $3,703,754,600 down about $100 MM.

12. ADM Investor Services – 12th in 2013, 12th in 2012, 2013 Seg required was $2,931,401,486 UP about $150 MM.

13. Mizuho Securities – 13th in 2013, 17th in 2012, 2013 Seg required was $2,054,124,905 UP about $300 MM.

14. BNP Paribas Prime Brokerage – 14th in 2013, 15th in 2012, 2013 Seg required was $2,019,918,460 UP bout $100 MM.

15. ABN AMRO Clearing Chicago – 15th in 2013, 13th in 2012, 2013 Seg required was $1,981,333,752 down about $500 MM.

16. Interactive Brokers – 16th in 2013, 16th in 2012, 2013 Seg required was $1,939,801,946 UP a little under $200 MM.

17. Jefferies Bache – 17th in 2013, 14th in 2012, 2013 Seg required was $1,879,889,000 down about $500 MM.

18. FC Stone – 18th in 2013, 19th in 2012, 2013 Seg required was $1,582,727,766 UP about $30 MM.

19. RBS Securities – 19th in 2013, 20th in 2012, 2013 Seg required was $1,449,331,490 down about $80 MM.

20. Rosenthal Collins Group – 20th in 2013, 18th in 2012, 2013 Seg required was $1,412,661,189 down about $17 MM.

21. MacQuarie Futures – 21st in 2013, 22nd in 2012, 2013 Seg required was $1,228,662,410 UP more than $230 MM.

22. HSBC Securities – 22nd in 2013, 21st in 2012, 2013 Seg required was $1,048,317,517 UP about $30 MM.

23. RBC Capital Markets – 23rd in 2013, 29th in 2012, 2013 Seg required was $913,109,618 UP about $350 MM.

24. BNP Paribas Securities – 24th in 2013, 31st in 2012, 2013 Seg required was $867,187,524 UP more than $300 MM.

25. Goldman Sachs Execution & Clearing – 25th in 2013, 24th in 2012, 2013 Seg required was $847,350,112 UP about $60 MM.

26. McVean Trading & Investments – 26th in 2013, 23rd in 2012, 2013 Seg required was $780,942,381 down about $140 MM.

27. Merrill Lynch Professional Clearing – 27th in 2013, 26th in 2012, 2013 Seg required was $768,875,721 UP about $160 MM.

28. Santander Investment – 28th in 2013, 30th in 2012, 2013 Seg required was $755,009,247 UP about $190 MM.

29. JP Morgan Clearing – 29th in 2013, 32nd in 2012, 2013 Seg required was $700,772,180 UP about $170 MM.

30. Timber Hill – 30th in 2013, 27th in 2012, 2013 Seg required was $697,230,646 UP about $85 MM.

31. Morgan Stanley Smith Barney – 31st in 2013, 25th in 2012, 2013 Seg required was $541,746,031 down about $110 MM.

32. Vision Fin’l Markets – 32nd in 2013, 28th in 2012, 2013 Seg required was $508,664,310 down a little more than $100 MM.

33. KCG Americas – 33rd in 2013, 34th in 2012, 2013 Seg required was $479,067,087 UP about $63 MM.

34. Advantage Futures – 34th in 2013, 33rd in 2012, 2013 Seg required was $472,691,258 down about $18 MM.

35. Tradestation – 35th in 2013, 35rd in 2012, 2013 Seg required was $405,195,906 UP about $17 MM.

36. State Street – 36th in 2013, 44th in 2012, 2013 Seg required was $313,855,544 UP more than $210 MM.

37. Rand Financial – 37th in 2013, 36th in 2012, 2013 Seg required was $305,541,900 down about $70 MM.

38. EFL Futures – 38th in 2013, NOT ON LIST in 2012, 2013 Seg required was $251,656,003 UP $251 MM.

39. ED&F Man Capital Mkts – 39th in 2013, 61st in 2012, 2013 Seg required was $224,076,887 UP around $200 MM.

40. Gain Capital – 40th in 2013, 43rd in 2012, 2013 Seg required was $141,613,581 UP around $28 MM.

41. Dorman Trading – 41st in 2013, 40th in 2012, 2013 Seg required was $139,473,664 UP around $5 MM.

42. CHS Hedging – 42nd in 2013, 39th in 2012, 2013 Seg required was $138,600,871 down around $62 MM.

43. Phillip Futures – 43rd in 2013, 38th in 2012, 2013 Seg required was $128,018,797 down around $90 MM.

44. UBS Financial Services – 44th in 2013, 42nd in 2012, 2013 Seg required was $127,693,950 UP around $11 MM.

45. BNY Mellon Clearing – 45th in 2013, 41st in 2012, 2013 Seg required was $127,163,740 UP a little over $2 MM.

46. TD Ameritrade – 46th in 2013, 45th in 2012, 2013 Seg required was $125,798,949 UP around $26 MM.

47. Straits Fin’l – 47th in 2013, 47th in 2012, 2013 Seg required was $105,553,578 UP around $21 MM.

48. Marex North America – 48th in 2013, 50th in 2012, 2013 Seg required was $103,751,249 UP around $26 MM.

49. Optionsxpress – 49th in 2013, 48th in 2012, 2013 Seg required was $88,080,380 UP around $2.5 MM.

50. Cunningham Commodities – 50th in 2013, 49th in 2012, 2013 Seg required was $78,442,862 down around $5 MM.

51. Linn Group – 51st in 2013, 51st in 2012, 2013 Seg required was $76,819,233 UP around $1.3 MM.

52. Crossland – 52nd in 2013, 46th in 2012, 2013 Seg required was $76,240,649 down around $8 MM.

53. Institutional Liquidity* – 53rd in 2013, NOT ON LIST in 2012, 2013 Seg required was $54,415,840 UP $54.4 MM.

54. York Business Associates – 54th in 2013, 53rd in 2012, 2013 Seg required was $50,049,543 down around $9.6 MM.

55. Nomura Securities – 55th in 2013, 59th in 2012, 2013 Seg required was $48,479,739 UP around $17 MM.

56. AMP Global Clearing – 56th in 2013, 56th in 2012, 2013 Seg required was $42,518,643 UP around $4.5 MM.

57. E Trade Clearing – 57th in 2013, NOT ON LIST in 2012, 2013 Seg required was $39,409,278 UP $39 MM.

58. Mid Co Commodities – 58th in 2013, 55th in 2012, 2013 Seg required was $36,944,999 down around $2 MM.

59. Ironbeam – 59th in 2013, 54th in 2012, 2013 Seg required was $36,264,716 down around $11.5 MM.

60. Xchange Financial Access – 60th in 2013, NOT ON LIST in 2012, 2013 Seg required was $27,685,254 UP $27.6 MM.

61. Frontier Futures – 61st in 2013, 60th in 2012, 2013 Seg required was $25,658,100 down a little less that $5 MM.

62. Wells Fargo Securities* – 62nd in 2013, NOT ON LIST in 2012, 2013 Seg required was $21,409,743 UP $21.4 MM.

63. Oppenheimer & Co. – 63rd in 2013, 58th in 2012, 2013 Seg required was $13,893,625 down around $19 MM.

64. GH Financials – 64th in 2013, 68th in 2012, 2013 Seg required was $6,012,801 UP about $5.5 MM.

65. Daiwa Capital Mkts America – 65th in 2013, 64th in 2012, 2013 Seg required was $4,340,614 UP about $1.3 MM.

66. Friedberg Mercantile Group – 66th in 2013, 62nd in 2012, 2013 Seg required was $3,996,235 down about $5 MM.

67. LEK Securities – 67th in 2013, 63rd in 2012, 2013 Seg required was $2,309,600 down about $2.5 MM.

68. Cantor Fitzgerald – 68th in 2013, 67th in 2012, 2013 Seg required was $1,312,018 UP about $100K.

69. Alpari (US) – 69th in 2013, 66th in 2012, 2013 Seg required was $322,439 down about $1.7 MM.

* – Institutional Liquidity and Wells Fargo Securities were both on the list as an FCM in 2012 but both FCMs had zero for Customer Seg Required.

New CFTC FCM Data Released (May 2013)

July 16, 2013

CFTC just published the May month-end report for FCM Financial Data. The raw link is above. I have sorted the data differently, ad posted the resorted data below.

This is from FCM 1FR reports, or CFTC/SEC FOCUS reports if the FCM is also a broker-dealer. Attached here is the CFTC report sorted by customer assets in Seg, and another version sorted by Customer Seg Required. I believe this is the best metric for measuring the depth and breadth of the U.S. futures industry, much moreso than simple exchange volumes and or FCM trading volumes. To me, trading volume is a good measurement of exchange/clearinghouse health (and revenue, naturally). But for industry health, I think customer assets is a better measurement.

Here is the May 2013 CFTC FCM Data sorted by Seg assets, and…

here is the same data sorted by U.S. Customer Seg Required.

Note that those are both download-able Excel Spreadsheets.

Weird fact: JP Morgan and Goldman are the two biggest FCMs as measured by U.S. Customer Seg amounts. Interestingly, Goldman has higher Seg Required (column J) than JPM, by about $1B. But JPM has more assets in Seg than GS, by about $600MM.

The four largest FCMs – GS ($17.5B), JPM $16.5B), Newedge ($14.3B), Deutsche Bank ($14.1B) – completely dwarf the rest. The 5th biggest FCM – UBS ($8.4B) – has way less than half the Cust Seg Required that Goldman carries.

The largest FCM, measured by U.S. Customer Seg Required, that is also *not* a broker dealer: RJ O’Brien, with $3.7MM in Cust Seg Required.

The largest FCM that has zero required in 30.7 funds (from foreign boards of trade): McVean Trading in Memphis. This means that 100% of their customer positions and assets are on U.S. boards of trade.

The total amount of Customer Seg required across all FCMs is $143.4B. Total Customer Seg assets is $154.5B, so an excess of $11.1B exists in FCM Seg bank accounts.

49.5% of all Customer Seg is carried at the top five FCMs: JPM, Goldman, Newedge, Deustsche Bank, and UBS. Nearly 75% of U.S. Customer Seg Required is carried at the top ten FCMs: the top five above plus Merrill, Citi, Morgan Stanley, Credit Suisse and Barclays.

The total number of FCMs even carrying U.S. Customer Seg balances – meaning the number of FCMs clearing customer business – was 70 in May, 2013. In November 2003 that number was 102, so we’re down more than 30% in FCMs clearing customer business in less than 10 years. In 2003, 102 FCMs reported $67.1B in Customer Seg. May 2013 reports showed $143.4B spread among 30% fewer FCMs.

I would argue that the number of FCMs carrying customer business is really on the only sign of ill-health in the U.S. futures industry. All other signs, especially growth of Customer Seg (and also exchange volumes) point to good health in the futures industry.

I’d be very interested to know what you all have to think about the signs of health in the futures industry, still recovering from MF Global and the Wasendorf fraud. What do these figures mean to you?

On Voluntary Subscriptions

January 9, 2013

I am a believer that folks should use whatever free resources available to them, both professionally and personally. Facebook, Twitter, LinkedIn, and Instagram are examples of services that are free for ordinary users/consumers, and I use all of them, for personal or professional purposes. (Sometimes I use one or more of them for both.) My usage for each of these services is based on their cost to me – nothing! If one or more of these services started to charge for the servies, then I’d make a value judgement on what the overall worth was, to me, and either pay or jettison the service, as my values dictated.

An example of this was the recent Chicago Tribune decision to switch from entirely-free content to limited free content, with a paywall behind which “premium content” was stored. This change came in November, 2012. For years before the switch I read the Trib online, paying nothing for all the content. When the premium content – mainly, opinion columnists, but also content from Trib partners publications like Forbes and The Economist, along with digital archives dating to the 1850s – was moved behind the paywall, I had to make a decision on whether to subscribe. (Ultimately I chose to subscribe. The Trib was and is, after all, my original hometown newspaper, and during the month I was considering whether to subscribe, I found I really missed a lot of the newly-minted “premium” content.)

The examples above – free applications/content, mandatory subscriptions – are two examples of how application providers and content providers deliver their apps and content to consumers. There is a third type, however, referred to sometimes as “voluntary subscriptions.”

One example of “voluntary subscriptions,” and one that I cite every once in a while when I’m talking about this topic, is science fiction author John Scalzi. Science fiction fans know Scalzi as the Hugo Award-nominated author of Old Man’s War, or maybe as the Campbell Award winner as best new Sci-Fi author in 2005. Scalzi also served as president of the Science Fiction and Fantasy Writers of America.

Not everyone knows, though, that Scalzi’s first two novels, including the Hugo-nominated Old Man’s War, were published under a voluntary-pay model on his website.

The real purpose of this post is to highlight another voluntary subscription content provider: the John Lothian Newsletter, and to encourage consumers of this daily newsletter to subscribe to the service.

We’re all familiar with the stats that Lothian publishes a couple times per year: with 15.5 million views in 2012, more than 33 million views since it launched; with 3 million page views since launching.

It is possible that many are not aware, though, that these wikis are funded entirely from the newsletter subscriptions (plus whatever sponsorship revenues the newsletter generates).

But there is more to the Lothian Newsletter than just the newsletter itself, and the associated wikis. There is also the Futures Crowd site launched after the collapse of MF Global, which solicited input from all over the capital markets industry on addressing concerns rising out of that firm’s failure (and to which I contributed); there is the Restoring Customer Confidence video series; there is the MarketsWiki.TV video series that covers a wide variety of captial markets industry-related topics, from the listing of new types of futures contracts to social media strategies for market participants.

The daily Lothian newsletter provides valuable, essential information to market participants at every level of the food chain, from traders to technologists, from front-office staff to back-office operations professionals, and especially for consultants like me. Put another way, if you don’t read the newsletter every day, then I’m smarter than you are, because I do read it every day.

This post is not some Public Television pledge drive, though, and it is not a paid advertisement either. I am a fan of the work that Lothian and his team do. I believe that this team is providing a genuinely valuable and vital service to the industry in which I work, and I believe that they deserve recognition, and that they deserve payment, for the terrific work they do.

So if you’re a participant, like I am, in the global capital market or futures industry, and you already subscribe to the newsletter, it is time to renew that subscription. Do that now. If you participate in the capital markets/futures industry and you don’t subscribe to the newsletter, you are doing yourself and your career a great disservice and you should fix that now by subscribing.

Yes, it is voluntary. But it is important, too, to all of us, to support the work that the team behind the Lothian Newsletter, and MarketWiki, MarketsReformWiki, the Restoring Customer Confidence video series and MarketsWiki.TV, are doing.


John P. Needham
January 4, 2012
11:05 AM
Aurora, IL

2012 in review

December 31, 2012

The stats helper monkeys prepared a 2012 annual report for this blog.

Here’s an excerpt:

600 people reached the top of Mt. Everest in 2012. This blog got about 3,500 views in 2012. If every person who reached the top of Mt. Everest viewed this blog, it would have taken 6 years to get that many views.

Click here to see the complete report.

Normandy Beach, NJ – Post Sandy #2

November 15, 2012

A friend I’ve never met (but will, someday, I swear) – Sal Arnuk – put together this little video. Vocals and guitar are from Sal. He also took the pictures from Normandy Beach. Notice that there is a boat in the parking lot of the big church with the green tile roof. Bailey Needham, our oldest son (12 years old in January) was baptized in that church in the summer of 2001.