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.

Contact Details

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

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Risk Warning

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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MF Global Investment of Customer Funds

Investment of Customer Funds
The CFTC also recently issued an advance notice of proposed rulemaking concerning the investment of customer funds, which was published in the Federal Register on May 22, 2009. The Commodity Exchange Act (“CEAct”) specifies that customer funds related to futures and options traded on a U.S. contract market may be invested by FCMs and DCOs only in U.S. government securities and municipal securities. Nevertheless, beginning in 2000, the CFTC used its general exemptive authority under Section 4(c) of the CEAct to permit the investment of customer funds in other instruments, including government sponsored enterprise securities, bank certificates of deposit, commercial paper, corporate notes, general obligations of a sovereign nation, and interests in money market mutual funds (“MMMFs”). Investment of funds of U.S.-located customers related to futures trading on non-U.S. exchanges is governed by CFTC Regulation 30.7, which does not limit the type of investment of such funds, but requires that an FCM maintain records that include a description of the obligations in which such investments were made.

CFTC Regulation 1.25, which governs the investment of customer funds related to trades made on U.S. contract markets, contains a general prudential standard that all permitted investments be “consistent with the objectives of preserving principal and maintaining liquidity.” The CFTC has been mindful of how important the earnings on investment of customer funds are to the net income of FCMs and thus had been open during the earlier part of this decade to an expansion of permissible investments. The CFTC noted that FCMs have managed the investment of customer funds and Regulation 30.7 funds responsibly during the recent economic downturn. However, the CFTC cited the market events of the past year, notably the failures of certain government sponsored enterprises, difficulties encountered by certain MMMFs in honoring redemption requests, illiquidity of certain adjustable rate securities, and turmoil in the credit ratings industry, as challenges to many of the fundamental assumptions regarding investment of customer funds. Although the CFTC in its advance notice states that it “welcomes comments . . . in support of any new instruments that might qualify as permitted investments,” the general tenor of the notice is directed towards soliciting comments concerning retaining, rescinding, or modifying existing authority. It would appear that the expansion of permissible investments is over.

The CFTC also is soliciting comment about applying the standards of Regulation 1.25 to Regulation 30.7, so that investment of customer funds related to trades on non-U.S. exchanges would be subject to the same limits applicable to funds related to trades on U.S. contract markets.

Any new restrictions on the investment of customer funds are likely to further squeeze the bottom line of FCMs, and contribute to a further contraction in the number of FCMs, which has been cut almost in half over the last 14 years (from 255 in August 1995 to 134 as of the end of 2008).

Comments are due by July 21, 2009.

It is not surprising that the CFTC would consider amendments to its regulations governing minimum capital requirements and the investment of customer funds following recent economic conditions. The proposals and requests for comment referred to above, however, could have the effect of further decreasing the number of FCMs, leading to less-well-capitalized FCMs, and resulting in a diminution of liquidity in the system just as clearing of OTC derivatives becomes more prevalent and desired, and even mandatory.

Andrew Abraham
Abraham Investment Management

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