In addition to managing global operations for one of the biggest financial services firms in the world, Steven D. Spence, managing director, Merrill Lynch Securities Services Division, is chairman of the Futures Industry Associaton. He joined Merrill Lynch in 1987. He has held various positions at the firm including manager of interest rate futures at the Chicago Mercantile Exchange and head of financial futures and options in both Paris and Asia. He has served on many boards and committees throughout his professional career including the MATIF International Advisory Board, CFTC Financial Products Advisory Committee, CFTC Technology Advisory Committee, HKFE Clearing Corp. and the FIA Japan Chapter. He was elected chairman of the FIA in March. Spence shares his perspective on the future of the futures business with Futures Industry editor, Mary Ann Burns.
The futures brokerage communitpais increasingly disparate when measured by the amount of customer equity held by firms. The latest semi-annual report on FCM financial conditions, released by the Commodity Futures Trading Commission on September 30, showed that 16 firms out of 192 each carried more than $1 billion in customer equity earmarked for trading on U.S. exchanges. Whatís more, the customer equity at those 16 firms (totaling $38.2 billion) accounted for 78 percent of the total of $49 billion.
Financial services firm seeks multi-faceted individuals with information technology experience, ability to manage multiple tasks, deal with customers and work long hours. Attention to detail a must; multi-lingual a plus. Flexible outlook required because your job description will change. Billions of dollars at stake and slim profit margins can disappear instantaneously. Applicants who possess these skills are eligible to join the back office team of a global futures firm.
Since the futures fever of the seventies, futures commission merchants have struggled with more regulation, extremely tight profit margins, high technology costs and the expenses of running a global operation (look and learn dot.com-ers). The FCMs have been trapped in the middle (thatís why they call them intermediaries) between demanding customers who want lots of service for a ridiculously low rate (you canít even go to a movie for what you can trade a $1,000,000 eurodollar contract) and exchanges who have little interest in helping their sales force achieve the efficiencies that would help them prosper.
The Board of Trade Clearing Corporation and the Options Clearing Corporation, the behemoth trade clearing entities for futures and equity options who are in merger discussions, appear to be defying a venerable LaSalle Street tradition. Namely, the talks are progressing amicably and merger adherents are optimistic about putting a deal together.
On September 14, the New York Board of Trade and InterCommercial Markets Corp. announced a plan for joint trading of commodities on the Internet. The two companies signed a memorandum of understanding to eventually combine their resources to trade soft goods online beginning with green coffee.
For the last two years, the FIA has worked with Congressional leadership and the financial industry to pass a bill that would bring futures regulation into the 21st century. It is not apparent that we will reach our goal this year, but not from lack of hard work and good intentions from all involved.