Does Anybody Feel Safe?

General discussions about futures.
sluggo
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Post by sluggo » Thu Aug 02, 2012 1:52 pm

Chelonia appears to be a particularly enthusiastic booster and supporter of Knight; the search below found five endorsements. I also seem to recall another that was such overt advertising, it was quickly scrubbed. Ah yes there it is (was), found it by searching for moderator when author=Chelonia. Let the buyer beware.
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Chelonia
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Post by Chelonia » Thu Aug 02, 2012 3:03 pm

You mean the one saying 1.75 a side?

Now that´s a good rate isn´t it! +15 years of clearing with no problems whatsoever is worth mentioning also. Just happy to share that experience.
That´s all.

mojojojo
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Post by mojojojo » Thu Aug 02, 2012 3:07 pm

Chelonia wrote:hmmm, my thoughts? I understand, through the media grapevine and from an article in WSJ, capital investors are looking at Knight. I think Knight is a good, cleanly operated company and look like an attractive option for an equity firm to partner up with. In return for capital, gives us a stake in your company. I hope that the other possibility, selling off pieces, does not happen and I really don’t think it will.
I think someone trying to get into or build out an ETF or Delta One desk would be seriously looking to purchase/partner with Knight.

I too think they are a good firm (generally, maybe need a better testing environmnet though), with good assets. The purchasuer would have to have a strong name to calm the markets and build confidence back in the company though.

Chuck B
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Post by Chuck B » Thu Aug 02, 2012 3:29 pm

Chelonia wrote:You mean the one saying 1.75 a side?

Now that´s a good rate isn´t it! +15 years of clearing with no problems whatsoever is worth mentioning also. Just happy to share that experience.
That´s all.
Wow, you're not paying $3.50 a turn are you? :shock: I had a 10+year great experience with GNI/Man/MFG, was paying $1/turn with a sliding scale downward based on turns/month, great service, no issues. Then I got Corzined.

Latest ZH post on Knight: http://www.zerohedge.com/news/will-pens ... ood-knight

M20J
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Post by M20J » Thu Aug 02, 2012 7:50 pm


Chuck B
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Post by Chuck B » Thu Aug 02, 2012 8:40 pm

Looks like it's bankruptcy time for Knight -- as expected nobody wants to step in before the full flush:

http://www.zerohedge.com/news/knight-co ... asset-sale

Moto moto
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Post by Moto moto » Fri Aug 03, 2012 3:26 am

what???? no Chinese hacker conspiracy theories, or old floor days of 'my pencil went rouge' and I spent months trying to cover it up Nic Leason style, Or what about the idea that the computer traded with itself, the money has gone to some off shore account.....

Even the (not my quotes :)) evil market making blood sucking floor destroying algos are not safe????

Recommended reading - Dark Pools by Scott Patterson - just finished in a timely manner for those interested in an easy light read on the subject of algo history and growth

Chelonia
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Post by Chelonia » Fri Aug 03, 2012 3:43 am

Another one bites the dust eh. In the process of closing positions and re-opening them with our other broker :(
Everything still working normal though

Funds with Knight are only 15% of AUM and seg and should be safe

:roll:

mojojojo
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Post by mojojojo » Fri Aug 03, 2012 9:34 am

Knight is up 25% at the moment. Maybe they found a partner.

Chuck B
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Post by Chuck B » Fri Aug 03, 2012 9:35 am

mojojojo wrote:Knight is up 25% at the moment. Maybe they found a partner.
The liquidity needed to get out for others. :lol:

Chelonia
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Post by Chelonia » Fri Aug 03, 2012 1:43 pm

Knight cliënt letter
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mojojojo
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Post by mojojojo » Fri Aug 03, 2012 3:16 pm

Chuck B wrote:
mojojojo wrote:Knight is up 25% at the moment. Maybe they found a partner.
The liquidity needed to get out for others. :lol:
ha ha.

Roscoe
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Post by Roscoe » Fri Aug 03, 2012 11:54 pm

For the purposes of comparison with the Knight letter, here is the PFG client letter of last year, just after MFG tanked:
PFG wrote:November 18, 2011

To our valued PFGBEST customers, affiliates, and partners:

Many futures and forex clients who had their accounts at MF Global have asked for PFGBEST assistance in getting them transferred out of MF or another firm that they were transferred to without having a choice in the matter. Many more have asked us to continue with the very strong advocacy on behalf of customers to be able to choose what firm they want to do business with.

We have been eager to provide answers to questions posed about the safeguards that we have in place. And we have been fighting back against the firms which stand to benefit from holding customer funds, and brokers, and CTAs as hostages in the scramble that has been taking place for several weeks now.

And, of course, PFGBEST continues to be among the strongest voices calling for the customer funds from MF Global to be returned to them in full without further delay. The CME Group made an important inroad when it took the unusual step of promising $300 million of its own money to help speed the return of customer money that remains trapped in MF Global following its bankruptcy filing two weeks ago.

As always, we respect your feedback and your inquiries and will give you the BEST answers that are available to us now and in the futures.

Regarding the sanctity of customer-segregated account balances:

PFGBEST does not hold customer segregated account balances in anything but cash or short-term U.S. Treasuries.

Transparency of customer segregated funds:
PFGBEST reports daily and monthly to regulators concerning customer segregated funds. An independent, certified audit is conducted annually in addition to periodic, regular audits by NFA and information requests from the CFTC and exchange representatives..

A word about our clearing firm:
Jefferies Group, Inc. has no meaningful credit risk in the sovereign debt of the PIIGS nations, and an insignificant risk related to interest rate movements. The company discloses its CUSIP information – specific holdings – on its home page daily. Immediately after the MF Global collapse, Jefferies had about $2.41 billion in so-called long bets on the sovereign risk of the five nations and $2.32 billion in short positions. Jefferies' executive committee chairman said that based on their investments in European sovereign debt, the value of the fixed-income portfolio would change by $37,000 if interest rates move by 1 basis point, or .01 percentage point. Jefferies has been profitable since the end of 2008, with net income rising 53 percent in the third quarter to $68.3 million, overcoming what the firm called "the extremely difficult and volatile operating environment." Jefferies, in its most recent (Aug. 31) public financial statement, showed more than $2 billion in cash.

No proprietary trading at PFGBEST:
PFGBEST does not do any proprietary trading, therefore you do not have any risk exposure as MF Global had, which caused it to be downgraded and eventually to file for Chapter 11 protection. The only trading done by PFGBEST is in specific instances, by emerging CTAs that PFGBEST allocates funds to (always less than $150k), so that they can become "products" that the PFGBEST Managed Futures Division can then offer to customers. The total amount of funds currently allocated is less than $400k.

PFGBEST financials:
PFGBEST is a family-owned and managed business and has been since it was founded (as Peregrine Financial Group, Inc.) more than 20 years ago. We have no outside investors. We protect our investment by managing our risk with the BEST risk-assessment tools and the BEST technologies available 24 hours a day, 7 days a week. We apply these real-time risk management methods and systems to help monitor the risk profile of every customer, position, and traded market at all times. PFGBEST has no off-balance-sheet investments and never has.

Liquidity:
PFGBEST has significant excess capital. Currently, PFGBEST holds 169% of the net capital required by the CFTC and NFA. All PFGBEST capital is held in cash or U.S. Treasury bills. PFGBEST does not use subordinated debt as capital.

Product suite and sustainability:
PFGBEST offers competitive commission rates; low day-trading margins, and award-winning customer service. We have more than 30 trading platforms for futures and foreign exchange, including BESTDirect ®, Trade Navigator, Ninja Trader, CQG, Strategy Runner, X_Trader, ProTrader, MT4, and iBroker Mobile.

In addition to online and full-service futures, foreign exchange, and futures options trading, PFGBEST has a robust Managed Futures Division. We also offer an array of precious metals services and products. Our front- and back-office services are state of the art, and in fact, we have developed and white-labeled these superior technologies.

PFGBEST is steadily in communication with regulators and exchanges, offering them access to our innovative technologies and intellectual capital to assist in any way with solutions for all customers, now and in the years ahead.

Thank you for being our customers, and thank you for your dialogue and commitment to a free, open, and transparent marketplace for all.

Russ Wasendorf, Jr.
President and Chief Operating Officer
Words are cheap, and often meaningless, when it all boils down. Who can we trust? Not the CFTC it seems.
Is there any country in the world that has actual financial safeguards that do anything in reality?

Chelonia
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Post by Chelonia » Sat Aug 04, 2012 2:57 am

Sure, but I think it´s comparing apples with pears...

We will know more by Monday evening. Apparently there´s alot of interest.
Until then don´t move :wink:

Aaron01
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Post by Aaron01 » Sun Aug 05, 2012 11:02 pm

Roscoe wrote:Who can we trust? Not the CFTC it seems.

Is there any basis that we ever should have trusted the CFTC? What is their track record on these situations? If they were any other institution besides a government agency, would we still allow them to exit/have such power?

Perhaps this is simply a case in which we're letting the visibility of their failures skew our opinion of them; sort of the opposite of the Talking Head Financial Gurus. Maybe they truely are far more succesful than we're giving them credit for, catching lots of bad actors but missing a few*. But that's a discussion that nobody has ever had. We entrust our (financial) lives, or at the very least our livelihood, to an organization with blind acquiescence and then are surprised when they don't have our best interests in mind.

*If they are only missing a few bad apples then they would appear to be missing the largest ones. In which case, there is something seriously wrong with the way in which they do business.
Is there any country in the world that has actual financial safeguards that do anything in reality?
The unfortunate reality about fraud and the laws surrounding it is that they always are applicable after the fact. Fraud is very rarely caught before situtions get really out of hand, so it's almost always an after the fact issue. That doesn't make the laws against fraud less valid, it's just their reality. Of course, this assumes that we actually enforce the laws on the books and not just Corzine them...

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