Sat, Nov 25, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Opalesque Futures Intelligence

Auditing of FCMs Enhanced by NFA, CMEGroup, AlphaMetrix Technology Pact

Friday, June 28, 2013

By Mark Melin

The National Futures Association (NFA) and the Chicago Mercantile Exchange (CMEGroup) both recently announced alliances with AlphaMetrix to enhance confirmation of investor assets on deposit at Futures Commission Merchants, the brokerage firms responsible for handling assets in the regulated derivatives industry. With this technical integration, the industry's self regulatory organizations will be able to identify and monitor in real time account balances in depositories holding customer segregated funds, a hot issue in MF Global and the PFG fraud.

AlphaMetrix offers a leading technical platform that provides professional asset managers the ability to gain detailed degrees of transparency into a fund's operations.

The managed futures direct account structure has been unique in alternative investing. Regulated by the NFA, CFTC and CMEGroup, investors can view significant trade transaction details - even peering into daily trade positions, all fees and margin to equity visibility.For a risk manager such transparency to the daily operations of the investment enables them to watch for style drift and overall exposure to position risk limits, a key component to active portfolio management regimes. It is this technical feature that regulators will now use to take their auditing one step further - confirming actual bank balances at FCMs.

"This confirmation of bank balances enhances the existing auditing process, where each registered managed futures CTA offering investments to the public undergo an NFA audit that targets the CTA's reported performance, fee calculations and business operations."

Performance that appears in marketing materials and that which is reported to the various managed futures databases is spot checked for accuracy. Audits of CTAs typically occur within the first three years of existence and then occur again depending on perceived need.

Stung by both MF Global and PFG instances, a situation where customer assets went missing from segregated account structure, regulators have moved aggressively to restore confidence. In the PFG situation false bank records were being provided to regulators, according to press reports and court documents (see related article below).



 
This article was published in Opalesque Futures Intelligence.
Opalesque Futures Intelligence
Opalesque Futures Intelligence
Opalesque Futures Intelligence
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Tourbillon Capital, a $3.4bn hedge fund that's been sounding the alarm about 'frothy speculation,' is suffering big losses[more]

    From Businessinsider.com: Tourbillon Capital, a $3.4 billion hedge fund firm led by Jason Karp, is suffering. The firm's flagship Global Master fund is down 3.5% for the first 17 days of November, bringing performance for the year to November 17 to a loss of 10.6%, according to a note to investors s

  2. Fund Profile - The Tiger of Silicon Valley: Glen Kacher's sizzling hedge fund[more]

    From Forbes.com: When you live and work in a town where the median home costs $2.7 million and hobnob with the executives of billionaire factories like Facebook and Tesla, it's easy to see why you might think technology stocks are invincible. So far in 2017, the Nasdaq Composite index has gained 25%

  3. Launches - Asset manager launches Europe's first bitcoin mutual fund, Prime Capital Aviation Debt Fund enables aviation debt investments for institutional investors[more]

    Asset manager launches Europe's first bitcoin mutual fund From Coindesk.com: A French asset manager has announced the launch of Europe's first mutual fund centered around bitcoin. Announced today, Tobam's alternative investment fund perhaps represents the latest bid to attract institutio

  4. Legal - Consumers say hedge fund financed illegal tribal lending, New York's highest court permits shareholder of a Cayman-incorporated company to bypass Cayman law and bring derivative action in New York[more]

    Consumers say hedge fund financed illegal tribal lending From Law360.com: Vermont residents on Tuesday hit a hedge fund with a proposed class action in federal court alleging it helped concoct a sham tribal payday lending scheme meant to skirt laws preventing companies from charging cons

  5. Investing - Tech still hedge funds' sweetheart sector: Goldman Sachs, Hedge funds haven't been this leveraged to buy stocks since the bull market began, Top financials hedge fund details short bet against Morningstar, Fund CRC presents an offer for Carige's consumer credit unit, Hedge funds sell shares in Altice USA after difficult quarter[more]

    Tech still hedge funds' sweetheart sector: Goldman Sachs From Reuters.com: Tech stocks remain the largest net sector exposure for equity hedge funds, which are set to deliver their strongest returns since 2013, Goldman Sachs said on Wednesday in a note on the industry's most and l