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CME Group wants customer money held at clearing houses
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Created: by brydubtrade Attachments:0

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CME Group wants customer money held at clearing houses

  #11 (permalink)
Private Trader
London UK
 
Futures Experience: Intermediate
Platform: VK (Futures) & TS (FX)
Broker/Data: Vankar + DTN.IQFeed (moved from Bloomberg)
Favorite Futures: Futures - Indices, Energy, Metals, Currencies (starting to look at some softs)
 
brydubtrade's Avatar
 
Posts: 18 since Jun 2012
Thanks: 32 given, 10 received

exactly, thats why I think a central futures pool may be the way to go as I too use ICE(E) for my brent trades and then there's eurex etc and I dont fancy having funds split across different clearing houses as that just wouldn't work for me.

I think something needs to be done though.

Maybe a funds insurance policy (guaranteed) might be worth considering but for the exact funds amount (here in the UK we have a compensation scheme but it is only up to £50K [savings get £85K] and if you have more in your broker, still leaves a shortfall)?

thanks all for your replies so far :-)

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  #12 (permalink)
Private Trader
London UK
 
Futures Experience: Intermediate
Platform: VK (Futures) & TS (FX)
Broker/Data: Vankar + DTN.IQFeed (moved from Bloomberg)
Favorite Futures: Futures - Indices, Energy, Metals, Currencies (starting to look at some softs)
 
brydubtrade's Avatar
 
Posts: 18 since Jun 2012
Thanks: 32 given, 10 received

although if the funds were split across clearing houses but at your broker it is all aggregated as a single lump, that might work...

just need to ensure the clearing house(s) don't go belly up ;-)

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  #13 (permalink)
Trading Apprentice
Melbourne Australia
 
Futures Experience: Advanced
Platform: NT T4 CQG
Favorite Futures: ES 6E
 
Posts: 18 since Feb 2012
Thanks: 1 given, 7 received


I always thought customer funds for futures were segregated? And they are right?
But how can the broker just take chunks of customers money out and gamble with it?
Is this not the fault of the bank where the money is held? Why do they allow this?
Its ok if the Bank itself invests the money like even money in a savings account they can, but they will never lose it.
How is the broker itself allowed to remove money from customer accounts without the proper records for trading and clearing purposes?
The banks need to be held liable for this I believe as they are regulated to supervise said segregated accounts and they are not doing it.

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The following user says Thank You to 1nfinlty for this post:
 
  #14 (permalink)
Private Trader
London UK
 
Futures Experience: Intermediate
Platform: VK (Futures) & TS (FX)
Broker/Data: Vankar + DTN.IQFeed (moved from Bloomberg)
Favorite Futures: Futures - Indices, Energy, Metals, Currencies (starting to look at some softs)
 
brydubtrade's Avatar
 
Posts: 18 since Jun 2012
Thanks: 32 given, 10 received

Hi 1nfinity - apologies for delayed response, still enjoying a summer break :-)

indeed, it completely amazed me what these brokers did and how they had managed to do it under the '?watchful eye?' of the banks and regulators...

Being a customer of MF Global UK at the time they went under, I have since learned that re-hypothecation seemed to be a major part in allowing the broker to prop-up their own bets with customer monies (even segregated I believe) which eventually lead to their going into chap 11/administration.

To be honest, I wouldn't have even known to look in the small print for re-hypothecation as probably naivety on my part, I thought segregated meant segregated (plus I had never heard the term re-hypothecation either..!).

Cheers
Bry

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