Andrew Abraham

andy-0101 My name in Andrew Abraham. I have been investing in commodities and managed futures since 1994. I adhere to the philosophy of trend following. Trend following stresses a disciplined approach to commodity/ futures trading. Successful trend following and commodity futures investing requires patience, discipline and actively managing the risk. What sets me apart from other traders is that I am not only concerned about the return on investment but how much risk I will have to tolerate to achieve my goals.

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If you are interested in contacting for speaking engagements. Please email me at Andrabr9@gmail.com or call 954 903 0638.

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Futures and commodity trading involve substantial risk. The evaluations of futures and commodities may fluctuate and as a result, clients may lose more than their original investment. In no event should the content of this website be construed as an express or an implied promise, guarantee or implication by, that you will profit, or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance. Information provided on this website is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible, where projections of future conditions are attempted.

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THE CME HAS MONEY RESERVED FOR FCM DEFAULTS Why did they wait?

I am neither a lawyer not accountant..but a trend follower. Simple question if the CME has money in reserves for times like this way did they wait and why is it only $300 million

Here is the full link of their 10k
http://investor.cmegroup.com/investor-relations/secfiling.cfm?FILINGID=1193125-11-50252&

The following shows the available assets of our clearing house at December 31, 2010 in the event of a payment default by a clearing firm for futures, options and cleared over-the-counter credit default swap contract after first utilizing the defaulting firm’s available assets:

(in millions)

CME Clearing House
Available Assets
CME Surplus Funds (1)

$ 221.7
Guaranty Fund Contributions (2)

2,208.1
Assessment Powers (3)

6,072.2

Minimum Total Assets Available for Default (4)

$ 8,502.0

(1) CME surplus funds represent the amount of working capital reduced by an amount necessary to support normal operations and amounts designated by CME for our interest rate swap financial safeguards package. Our target for the CME surplus funds is $100.0 million with amounts in excess of this target generally paid as a dividend from CME to CME Group on a quarterly basis based on prior quarter-end balances.
(2) Guaranty fund contributions of clearing firms include guaranty fund contributions required of clearing firms, but do not include any excess deposits held by our exchange at the direction of clearing firms.
(3) In the event of a clearing firm default, if a loss continues to exist after the utilization of the assets of the defaulted firm, CME surplus funds and the non-defaulting clearing firms’ guaranty fund contributions, we have the right to assess all non-defaulting clearing members as defined in the rules governing the guaranty fund, up to 2.75 times their existing guaranty fund requirements.
(4) Represents the aggregate minimum resources available to satisfy any obligations not met by a defaulting firm subsequent to the liquidation of the defaulting firm’s performance bond collateral.
The following shows the available assets of our clearing house for the interest rate swap financial safeguard package at December 31, 2010 in the event of a payment default by a clearing firm that clears interest rate swap contracts, after first utilizing the defaulting firm’s available assets:

(in millions)

CME Clearing House
Available Assets
CME Designated Working Capital for Interest Rate Swap Contracts (1)

$ 100.0
Guaranty Fund Contributions (2)

550.0

Minimum Total Assets Available for Default (3)

$ 650.0

(1) CME designates $100.0 million of working capital to satisfy a clearing firm default in the event that the defaulting clearing firm’s guaranty contributions and performance bonds do not satisfy the deficit.
(2) Guaranty fund contributions of clearing firms for interest rate swap contracts include guaranty fund contributions required of those clearing firms.
(3) Represents the aggregate minimum resources available to satisfy any obligations not met by a defaulting firm subsequent to the liquidation of the defaulting firm’s performance bond collateral. In the event of a clearing firm default, if a loss continues to exist after the utilization of the assets of the defaulted firm, CME designated working capital and the non-defaulting firms’ guaranty fund contributions, we may have the right to assess all non-defaulting clearing members as defined in the rules governing the interest rate swap guaranty fund.
Despite these safeguards, we cannot assure you that these measures will be sufficient to protect us from a default or that we will not be materially and adversely affected in the event of a significant default.

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Andrew Abraham
Abraham Investment Managment


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