Will Mitting guages the reaction from CTAs to the PFGBest fraud.
Commodity Trading Advisors have been among the hardest hit
by the fraud at PFG Best resulting in the closure of some funds
and a collapse of confidence in others. The industry is calling
for a response with segregation and a default liquidity fund
taking centre stage, found William Mitting.
Within days of the collapse of PFGBest, Cervino Capital
Management closed its doors with managing director Mack
Frankfurter issuing a heartfelt letter to clients. In the
letter, Frankfurter said that CTAs were "not structured to
handle the systemic risk of the kind underlying the MF Global
and PFGBest calamities".
CTAs clearly need better protection from the collapse of
FCMs and the implications of the PFGBest collapse coming so
soon after MF Global will be felt for a long time. Many CTAs
already took steps in the wake of MF Global to diversify their
clearing firms and this trend will accelerate.
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