However, that’s not all, 8 others had less than the ‘+/- Target Residual’. That’s the FCMs pre-reported (monthly) goalpost given to the Regulator (the CFTC in this case) of how much excess funds they plan to have around. Apart from the three mentioned, there’s Goldman (-USD 107 million), BAML (-USD 119 million) plus UBS, CS and Barclays all with less than -USD 100 million each. Interestingly, ABN had its +/- Target Residual number quite significant at -USD 410 million. Please note, this is a MONTHLY target and may have some wiggle room… but I understand from the article that at least one FCM is seeking monetary redress from a customer(s) via legal means…no more quiet chats appealing to patriotism or common sense then. It also means an obvious glaring good
thing...no FCM has hit the wall despite what’s happened back in February. They’re all still here.
Some of these negative balances could be accounted for or explained by simply human staff error in late or inappropriate placement of segregated funds in non-segregated locations – worrying for the regulators but perhaps mitigated by being understandable. However, I’d like to think it shows once again how fragile liquidity is…as in 1907. The difference is that now if you can’t get the funding in time, then it’ll now be outed in the public domain for all to
see...plus each FCM will have to make up the difference from their own resources. Plus ça change!
The picture I’ve used here is a USD 100 bill locked in ice…it visually sums up what has and will be the
problem...in stock markets and commodity markets.
Eddie Tofpik E:
eddie.tofpik@
admisi.com T: +44(0) 20 7716 8201
17 | ADMISI - The Ghost In The Machine | May/June 2018
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