NO TEETH PART DEAUX
Here are the exact proposals of the CFTC to make commodity trading safer
The proposal would enhance the protection of customers and customer funds by:
• Amending Part 30 of the regulations to require FCMs to hold sufficient funds in secured accounts to meet their total obligations to both U.S.-domiciled and foreign-domiciled customers trading on foreign contract markets, computed under the net liquidating equity method; Why wouldn't this have always been the case?
• Prohibiting FCMs from holding any positions in a Part 30 secured account other than customers’ foreign futures and option positions and associated margin collateral; This does nothing.
• Requiring FCMs to hold sufficient proprietary funds in segregated accounts and Part 30 secured accounts to reasonably ensure that the firms are properly segregated and secured at all times, and to cover margin deficiencies in customers’ trading accounts; This is already supposed to be going on. The nice secret nobody ever tells anyone is what happens if one client has a huge margin call they can't cover. Ultimately it falls on the other traders to cover the loss if the FCM can't.
• Requiring FCMs to maintain written policies and procedures governing the maintenance of excess funds in customer segregated and Part 30 secured accounts, and requiring FCMs to obtain the pre-approval of management prior to the withdrawal of 25 percent or more of the excess funds held in segregated or secured accounts if the withdrawals were not for the benefit of the FCMs’ customers; Management is who is perpetuating the frauds. This is like asking for the foxes approval for him to let a fox loose in the hen house. This is a DISGRACE. This is asking the criminals to approve their own crime for god sakes!
• Requiring FCMs to provide the Commission and their respective designated self-regulatory organizations with daily reporting of the segregation and Part 30 secured amount computations, and semi-monthly reporting of the location of customer funds and how such funds are invested under Regulation 1.25; This could be helpful, release the balloons the whole report is not a complete waste of ink.
• Requiring FCMs and DCOs to provide the Commission and designated self-regulatory organizations, as applicable, with read-only direct electronic access to bank and custodial accounts holding customer funds; Yes this could help but it won't prevent theft if will just catch it sooner. The courts will still hold all the money for an eternity and you will wind up with pennies on the dollar like we have seen now 3 times in the last 2 years. Sentinel, MF and PFG.
• Requiring FCMs to adopt policies and procedures on supervision and risk management of customer funds; Are you kidding? They don't already have this? This is supposed to be the most sacred haven of all brokerage accounts. Do you mean to tell us there are no policies in place to protect the money?
• Requiring FCMs to provide potential customers with additional disclosures addressing firm specific risks; and Does this mean they are going to tell us in advance they will steal our money? Additional disclosures is code for off loading responsibility. What exactly are they going to get us to sign off on now?
• Enhancing the standards for the self-regulatory organizations’ examinations of member FCMs. The standards are fine they just need to be followed. All they had to do was call the bank one time.
The proposals will be open for public comment for 60 days after publication in the Federal Register.
It makes you realize how little protection there actually is in all of this and how at risk your money is. The most alarming sentence in the whole draft is the one about additional disclosures. Typically a disclosure is something you are made aware of that is averse to you and you are being asked to agree to take on risk.
After decades of traders have routinely put their money into brokerage accounts assuming that the risk was from their own trading decisions. Now in our new age of stealing from our brothers the policies are going to be to warn us more thoroughly how at risk our money is?
THE WHOLE POINT OF ALL OF THESE PROBLEMS IS FOR THE REGULATORS TO MAKE OUR MONEY SAFER NOT TO MAKES US ALL AGREE TO IT BEING OUR FAULT THAT SOMEONE ELSE STEALS IT AND TO HAVE MORE LIMITED RECOURSE.
I propose that we collectively between myself and all the readers draft a letter in here over the next couple of weeks that we send to the CFTC. Let's all chip in and work together to try and make some positive suggestions for things that will actually help everyone. The above draft does very little of that. I will start the letter but please make comments so we can try to make a difference. I know some of you who have not been burned by MF or PFG probably don't worry about this. I would hope that when you read what is above that is being proposed you come to realize how much risk there is in the safety of your funds. Please contribute something.
Off to the markets we go.......
Here is a chart I show often in here the shows when the VIX gets stretched to the point where a market reaction should occur. You can see the last two times we got beyond the bands what happened and we are beyond them again now. This could be a small bounce or a big one. There is no way of knowing what type of rally this will lead to if it leads to one at all. However, this is a tool with an edge so I am looking for a bounce in the stock market in the next couple of days.
In the days we live in now where so many markets move with the stock market, I also expect many other markets to bounce along with this. It is nice to see the stock market getting this over sold at this time of the year. It should be a bullish situation for a year end rally. We won't know if this bounce is a sell or a resumption of the up trend until it begins to take place. Once it does we can watch some other things to see if they are supporting a continuation or reversal. For the time being it is a long setup for me.
Please send in your suggestions for the letter to the CFTC so we can get cracking on that.