This blog was originally set to post on 10/31/12, due to Hurricane Sandy and the issues that we faced on Long Island, New York, it was delayed.
The following was an email I sent to Bart Chilton on the eve of the MF global Collapse. The actions that were not taken by the CFTC and the CME added undue risk into the markets – many traders and introducing brokers never recovered from being locked out . While John Corzine is a free man, and the board members of the CME and commissioners of the CFTC point fingers and have conflicting stories, they are still in positions of power. The real question is ’What lies ahead for investors?’ The markets with cleared swaps are only getting more complicated to regulate and the speed in which events happen will only get faster. We have seen over and over that the regulators are still behind on understanding the futures markets.
As a former NYMEX Board and Executive Committee member, as well as an investor, I am deeply concerned about what lies ahead. The meltdowns of the past will seem small and slow in comparison to what is about to happen in the near future The time has come to reform the CFTC and the SEC with people who understand the new markets and how they are traded.
My email to Bart Chilton clearly points out what I thought would happen and did –
I am sure you are up to your ears dealing with the MF Global issue . However, the Floor Traders both in Chicago and New York are being put in a position that is just unnecessary. They are not part of the issue, the funds should be in a seg account and they should be allowed to be moved quickly and with ease.
There is no more risk in these account then there were days ago and, if anything, the CFTC has caused all the accounts to have unlimited risk since they can not be managed by the traders. Liquidation only for these traders will, and can, do more harm in the markets. It will cause moves that are not with in the normal parameters of trading and many traders and companies could have major issues which could have easily been avoided .
In the end, none of the money in the traders account will provide help for the issues that MF Global now faces and lives will be destroyed.
Refco??? All the traders on NYMEX and CME got all their money back. Can we all learn from the past to see where this is going and stop the pain to the people who had nothing to do with this?
This is the easiest part of the problem and the CFTC can and should handle this tomorrow.
I realize that many of the people you work with do not understand all clearing and exchange issue. However, after our conversations, I believe that you do and that you can see my point.
If I can help out in any way please let me know .
David D. Greenberg
President, Greenberg Capital