Futures Trading and the Protection (and Preservation) of Customer Funds - Virtual

A look at what is happening in the regulation (or failures) of commodity futures brokerage firms and customer funds. First MF Global, then PFG. Why has the long established principle of customer segregated funds failed and how well do customers understand the limited protection offered by futures exchanges' clearinghouses? These topics will be discussed along with an overview of the regulation and legal descriptions of the brokerage firms that are regulated by the Commodity Futures Trading Commission. In addition, a practical solution for traders will be suggested without having to wait for new regulation.

Take this class without ever leaving the office via our Virtual Classroom (Virtual NYIF). Accessible from any internet connected computer - regardless of where you are geographically. All you need is an internet connection, a browser and speakers or audio headphones!

No sessions currently available. Contact client services to get the next available date.
CPE CREDITS
1
Current and prospective users of the futures marketplace (speculators and hedgers) as well as anyone connected to the futures trading industry.
No advance preparation required.
Students will be able to:
  • Describe Futures Industry regulation and the different kinds of brokerage firms regulated by the CFTC
  • Explain the concept of Segregated Funds and protection of Open Trade Equity profits
  • Understand the limited protection the futures exchanges offer customers
  • Look beyond balance sheets
  • Explain how such brokerage firm failures went undetected
  • Take away a practical suggestion for how clients can protect their funds
Futures Trading and the Protection (and Preservation) of Customer Funds
Over-View of the Regulatory Structure of the Futures Industry
  • Commodity Exchange Act
  • Dodd-Frank
  • 3 Tiers of Regulation: Federal - Commodity Futures Trading Commission (CFTC) ; Self Regulatory Organization - National Futures Association (NFA); The Exchanges themselves

Over-View of Entities that Comprise the Futures Industry

  • Futures Commission Merchant brokerage firms (Clearing and Non-Clearing)
  • Introducing Broker brokerage firms
  • Commodity Trading Advisors (CTAs) and Commodity Pool Operators (CPOs)
  • Futures Exchanges

Customer Protection

  • Segregated Funds
  • Futures Margin
  • Clearinghouse protection of open trade equity profits

What happens when you open an account and deposit funds

  • walk through of a hypothetical situation
  • the house of cards no one likes to talk about (and other myths)
  • What can go wrong? (MF Global, PFG, Refco)

One approach customers might use minimize their exposure

    Look outside the brokerage firms’ balance sheets

      A bigger concern

      • Unlicensed (and therefore unregulated) fraudulent firms and schemes
      • Make regular use of FINRA Broker Check and NFA's BASIC

      What can we expect from the regulatory structure

      • New rules that have been just recently been written
      • Is a SIPC-like agency in the works?
      • Cautionary tale of the regulators being stretched too thin

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