THE GROUP OF THIRTY

The recent report by the Washington-based think-tank, the Group of Thirty, sought to address many of the problems associated with the risk ofover-the-counter derivative products. The Group of Thirty or G30 is a private group made up largely of the senior management of banks from all over the world and academics working in the field of economics.

The current members are:

1. Rt. Hon. Lord Richardson of Duntisbourne KG, honorary chairman
2. Paul Volcker, chairman, Group of Thirty, and chairman of James DWolfensohn Inc.
3. Dr Pedro Aspe, Secretario de Hacienda y Credito Publico Mexico
4. Geoffrey Bell, executive secretary, Group of Thirty, and president of GeoffreyBell & Company

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Posted: January 26th, 2008 under Future Management, Futures Trading System.
Comments: 5

Collapse of the Bretton Woods Agreement

Up to the First World War, the world’s currencies were described either as hard or soft currencies, depending on whether they were convertible into gold at a fixed or floating exchange rate.

In 1945, after the Second World War, the Bretton Woods Agreement was reached and was responsible for keeping a narrow band of fluctuation (2 per cent) between the US dollar, which was pegged and convertible into gold, and other currencies.

By the 1970s it had become impossible to keep so many currencies, each from countries with completely different economic growth rates, within the agreement, and so in 1972 it was abandoned. Read more »

Posted: January 26th, 2008 under Commodities Futures, Currency Futures, Future Exchange, Future Trading, Futures Contracts, Futures Market.
Comments: 3

Development of Derivatives in the UK

The history of derivatives in the UK can be dated back to the arrival of the first centralised commodities market, founded in 1565 by Sir Thomas Greshamand opened by Queen Elizabeth I. It was based in the Royal Exchange (which in 1982 became the first home to the London International Financial Futures Exchange, Liffe) and was run along similar lines to the Amsterdam Trade Centre in the Netherlands, which had opened a few years earlier. Each commodity had a different part of the Exchange from which to trade. Despite the Great Fire in 1666, during which the Exchange building burnt down, commodity trading flourished in the City taking to the coffee houses, while the Royal Exchangewas being rebuilt. Read more »

Posted: January 26th, 2008 under Future Exchange, Future Trading, Futures Market, Futures Prices.
Comments: 4

The financial term ‘derivative’ is a generic term for any instrument which is based on an underlying financial instrument or commodity. The term covers, most commonly, futures and options contracts. For instance, a commodity future is an instrument derived from the commodity markets—the markets which operate for the purchase and sale of corn and other grains, metals, oil and so on. In the same way, an index option is derived from an index.

Confusingly, the name ‘futures‘ is often used in an equally all-encompassing way, and certainly the term ‘managed futures‘ covers the use of all types of derivative products. This report focuses predominantly on managed futures, meaning investment in futures and options instruments. Read more »

Posted: January 26th, 2008 under Commodities Futures, Futures Contracts, Managed Futures.
Comments: 5

The US’s Mar has conducted a sample study of 30 of the United States and their involvement with managed futures.

It estimates that four US states are involved in or are close to making an allocation in managed futures — Virginia, Massachusetts, Illinois and Alaska. It considers that three have not considered managed futures: Alabama, Oregon, South Carolina. Nine states have ‘looked into managed futures but have not acted to use it or have decided against it’ — Connecticut, Indiana, Louisiana, Maine, Montana, New Mexico, Oklahoma and West Virginia. Two states are neutral, according to Mar, Florida and Pennsylvania. A further nine have sufficient futures exposure in their equity and fixed-income portfolios or overlay strategies (California, Colorado, Idaho, Kansas, Maryland, Nevada, Tennessee, Wisconsin and Texas). Read more »

Posted: January 26th, 2008 under Future Exchange, Future Fund, Managed Futures.
Comments: 4

The managed derivatives industry is, without doubt, still in its infancy. More developments and growth lie in its future than have happened in its past. Practitioners in the managed futures industry in Europe should not get depressed about how little headway they seem to have made, when they consider that unit trusts in the UK are 60 years old, and did not see huge growth in funds under management until the 1980s.

It must also be remembered that not only is the managed futures industry worldwide very young, it is also very small. This is a niche market with US$ 13-15bn, maybe US$ 21bn, under management. To put this into perspective, it may be helpful to remember that a single fund group such as Fidelity has US$ 153bn under management. Read more »

Posted: January 26th, 2008 under Future Fund, Future Investing, Future Management, Managed Futures.
Comments: 5