Teucrium’s Gilbertie: Futures ETFs Are Safe
July 19, 2012
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Peregrine Financial’s fraud-laden demise—the latest in a string of collapses of other brokerage firms in recent months—has brought into focus some of the risks investors may face when they put their dollars in the hands of smaller, independent futures brokers. Investors’ confidence in markets, in would appear, has taken another hit.
Sal Gilbertie, head of Teucrium Funds—an ETF provider offering futures-based commodities ETFs—told IndexUniverse’s Correspondent Cinthia Murphy that futures-based ETFs might be the answer to retail investors’ futures-related concerns. Gilbertie, whose firm sponsors the red-hot, $100 million Teucrium Corn Fund (NYSEArca: CORN), argued that the transparency of the ETF structure ensures that investors’ interests are guarded closely.
Murphy: Peregrine Financial’s demise comes less than a year after MF Global suffered the same fate. Refco preceded that. It’s a trail of scandal involving futures brokers that doesn’t reflect well on futures markets, or futures-based investments. What’s your view?
In the futures market, investors are protected by the clearing mechanism that backs-up their margin. Investors that leave excess margin in the hands of their FCM subject this excess capital to risk. Non-public FCMs are not subject to the same level of SEC required scrutiny and regulation that applies to publicly traded ETPs. The Teucrium family of NYSE funds sweeps its excess capital from our FCM on a daily basis.