PFGBEST announced yesterday that it is purchasing the customer assets of non-clearing futures commission merchant Alaron Trading Corporation.
This will further shrink the ranks of independent futures brokers, which had been thinning for several years due to industry consolidation.
The Securities and Exchange Commission (SEC) has, to put it mildly, had a not-so-great record of keeping fraud in check over the past few years, and now the U.S. government could be taking action. The Obama administration could strip the SEC of some of its powers as part of a regulatory overhaul, according to Bloomberg. While the story merely speculates on the removal of powers, some of which would be handed over to the Federal Reserve, it’s an interesting idea and raises questions about where regulation in the United States is headed. (more…)
With the Western world moving to quantitative easing and a near 0% interest rate environment, experts agree that interest rate differentials are no longer the significant driver of forex markets as they were in the past.
Adam Boyton, G10 FX Strategist for Deutsche Bank, discussed this along with other factors driving forex markets on a conference call Tuesday afternoon.
Among Boyton’s observations was that equity markets have priced in too much of a recovery, despite pressure the dollar will remain the preeminent reserve currency for at least another five years and that interest rate differentials will no long be a primary driver of forex markets. “[The market] will look at interest rate differentials, but not as much as before,” Boyton said.
This week has been a busy one for new regulation affecting the futures and options industry. It started off on Monday with the Treasury’s 2010 revenue proposal that included a proposal to eliminate 60/40 tax treatment for futures and options traders. Then on Wednesday, the Treasury Department released a proposal on regulatory reform for over the counter (OTC) derivatives. That one was less of a bombshell.
The justification by many experts for the strong dollar recovery that began last summer was based on an assumption that the U.S. Central Bank was making all the right moves and being more proactive than Europe and Asia. The thinking went, the U.S. economy is bad, but it is worse everywhere else and we will recover first.
Now we are seeing signs that Asian and European economies appear closer to turning things around than the U.S. economy. This has bad implications for the dollar.
The Financial Times reported on its front page yesterday that there are signs of recovery in China and Europe but “U.S. slowdown continues.”
The U.S. Treasury’s 2010 revenue proposal, released Monday, included a bombshell for the futures and options industry: the possibility of the end of preferential 60/40 tax treatment for futures and options. Under the 60/40 rule, enacted 25 years ago, for U.S. futures contracts 60% of gains are considered long-term gains, taxed up to 15%, and the remaining 40% of gains are considered short-term gains, taxed up to 35%. The Treasury’s proposal would eliminate 60/40 treatment. (more…)
On Wednesday May 6 the House of Representatives passed the Fraud Enforcement and Recovery Act of 2009 that would create a commission to study the reasons behinds our current economic crisis. This would be similar to the 9/11 commission, which was created “to prepare a full and complete account of the circumstances surrounding the Sept. 11, 2001 terrorist attacks.” And like the 9/11 commission you would not expect government leaders to wait until such a commission had completed its work to make changes to prevent another attack, in the case of the 9/11 commission, or to repair the underpinnings of our financial structure in the current crisis.
However, given the amount of money that has been committed to various bailouts, we should be expecting the results of such a commission at this point not its formation.
Today is Cinco de Mayo, but investors in Mexican securities probably won’t be whipping out their party sombreros and tequila any time soon. The dreaded swine flu (or H1N1 flu, for the politically correct crowd) is hitting Mexico hard, costing the country $100 million a day, according to some experts. This spells trouble for the Mexican Bolsa Index, which lost 3.3 percent when news of the flu broke on April 24, according to Robert P. Smith, founder of Turan Corporation, a firm specializing in trading emerging markets’ sovereign debt. (more…)
Regulatory issues are all the rage today in Weston, Florida, at the 27th Annual Options Industry Conference. At a press breakfast this morning, Chicago Board Options Exchange Chairman Bill Brodsky discussed the changing of the guard at the Securities and Exchange Commission and Commodity Futures Trading Commission. He called new SEC chair Mary Schapiro “as well qualified as anyone in recent history” and said the SEC “has a really good cadre of commissioners.” Meanwhile, confirmation for President Obama’s nomination to head the CFTC, Gary Gensler, is being held up by various political stalemates in the Senate. Brodsky said he “doesn’t know whether [Gensler] will make it” but hopes to see him get the job.
