By Jacob Bunge and Ben Kesling
Doom and gloom stalked the Futures Industry Association
gathering in Chicago, but some of the derivatives world elite
looked for a laugh, if only to keep them from crying.
Halloween is now a date of infamy for the futures
industry--brokerage firm MF Global Holdings Ltd. (MFGLQ) completed
its rapid implosion just as the candy was being handed out last
year. The following 12 months has seen another brokerage, Peregrine
Financial Group Inc., collapse after a long-running fraud, wider
industry trading volume has slumped, and then, Sandy huffed and
puffed and blew many markets down for two days.
Things can't get any worse, can they? "We expect locusts to be
flocking down on the city any time," said Walt Lukken, the FIA's
top executive. Attendees at the annual Chicago gathering
laughed--most, anyway.
Mr. Lukken filled in the opening slot typically reserved for the
chairman of the Commodity Futures Trading Commission. But the
CFTC's Gary Gensler was here only as a spirit this Halloween, stuck
in Washington D.C. because of the storm. He planned to record a
video address to be aired Thursday.
So Mr. Lukken offered his own macabre tale, not safe for
children, but all too familiar to fellow executives weary with
unfolding industry regulations. Several years ago, he said, the
CFTC notified him that he had been named on a "death list" drawn up
by an irate former commodities broker. Yet Mr. Lukken said he
breathed a sigh of relief, elated because the call from the CFTC
hadn't been to reject his prior employer's effort to open a new
clearinghouse.
SANDY SHUFFLES POSITIONS
The storm's damage to the East Coast created some empty chairs
at the FIA event that otherwise would have been filled by New
Yorkers - including NYSE Euronext (NYX) Chief Executive Duncan
Niederauer, who stayed home to preside over the Big Board's
reopening after Sandy swept through.
Stepping into Mr. Niederauer's costume on a panel discussion was
Finbarr Hutcheson, a former Goldman Sachs Group Inc. (GS) executive
director who joined NYSE Euronext 18 months ago, now co-CEO of its
London-based futures platform. Mr. Hutcheson's rapid ascent to the
CEO panel was due largely to arriving early from London.
The timing of this year's conference meant different priorities
for others. Terry Duffy, executive chairman and president of CME
Group Inc. (CME), said he planned to cut out early from
futures-related festivities Wednesday to go home and hand out candy
to trick-or-treaters.
MONSTER MASH
Several attendees debated Wednesday what might make for the
most-frightening, futures-themed Halloween garb. Suggestions
included a zombie banker, a comatose fed-funds rate and a t-shirt
labeled simply "Futures Industry," with the wearer sporting a black
eye. It's been that sort of year for the industry.
So it was little surprise when one attendee showed up at a
gathering Wednesday dressed in an orange jumpsuit, wire-rimmed
glasses and a false gray beard, toting a sign referring to Jon
Corzine, the former MF Global CEO and New Jersey governor blamed by
the firm's customers for destabilizing the futures firm with
unsound investments. Plenty of lawyers in the room.
FLOORED BY SANDY
The exchange sector's response to this week's storm put Jeff
Sprecher, CEO of IntercontinentalExchange Inc. (ICE), in a
contemplative mood.
Mr. Sprecher has made it his business to take derivatives
markets electronic, which has meant closing a few trading
floors--last month, the New York Board of Trade, acquired by ICE in
2006, saw its last orange juice contracts change hands in the
pits.
However, this week's determination to close markets in stocks
and related derivatives for two days, due in part to concerns
around opening and closing NYSE-listed securities-- a function
carried out by the exchange's floor denizens--shows how important
that trading floor still is," said Mr. Sprecher.
Write to Jacob Bunge at jacob.bunge@dowjones.com
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