The CFTC and its regulatory oversight structure (with the NFA) deserves national attention, something for the equity world to follow. For example, the bedrocks of "Bernie Madoff-like" fraud prevention -- account segregation, counter party surveillance and general transparency – warrant a national spotlight in how they have successfully thwarted fraud in managed futures, the primary investment opportunity to spawn from the futures and options markets. Intelligent regulation has generally provided the asset class legitimacy through performance auditing and requiring adherence to strict business standards. No investment is perfect. But these bedrock fraud prevention methods...
"But here is the punch line:
The regulation doesn’t touch what are likely the next commodity crises (note the plural on crisis).
Forget the fact that the long only commodity ETFs could be a volcano ready to explode on the supply and demand commodity ecosystem. The issue is “Bernie Madoff-style” hedge fund fraud: it will happen again. And this is unnecessary."
"However, it should be emphasized that CTAs and direct managed futures accounts are currently significantly regulated relative to hedge funds. What is missing from financial services reform is a spotlight on the many managed account protections that could be applied to the hedge fund world, including private sector counter surveillance, a version of account segregation for fund investments and transparency (gasp...) in fund investments to varying levels."
I don’t entirely agree with the Chairman’s view on the economy being in a “normal” recovery cycle, but there are interesting comments. The key point I liked about Alan Greenspan’s morning interview on CNBC was his acknowledgement regarding non-governmental counter party surveillance in the regulatory structure. This is one of the key features in regulation of [...]
Thursday, July 15, 2010
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