What are the characteristics Of a house clearing trades that would make you trust them?

[parsley]

The biggest hurdle Tom, what I hear, is one of
trust.

Whether we are going to have institutions come
in or we create them : Brokerage houses.
Clearing houses, Commodity exchanges.
Currency exchanges etc., isn't the goal to
actually USE them?

Alberta Barley Growers created a clearing house.
Post the webage, will you, Tom. I must have
missed it. You posted Australia!

Cott bare-boned a brokerage. He had few
responses. Nobody understands ? Didnt trust ?
Don't care? Prefer a Hong Kong brokerage?

Is ICE credible? If not, why? Pars

[pgluca]

ICE has a problem but It is more getting a critical mass than trust or credibility. The western barley futures once they got thinly traded basically just disappered. We may have too many exchanges trying to trade wheat. We will know a lot better next winter.

[parsley]

Pgluca, isn't trust critical to attracting mass?
Pars

[bduke]

Parsley... Your questions regarding understanding and mistrusting equate to risk... in
my mind.

Mf Global has done a great disservice to grain pricing and payments confidence.

However, the fallout should be improved security and stronger guidelines regarding
other people's money.

I worry that the Exchanges have become huge businesses, rather than forums for price
discovery, and they tend to protect their proprietary interest first.

The concept of having a fee based contingency fund from trading has been around for
a while. The interest has grown since the Canada Grain Commission has greatly
reduced its responsibility for ensuring adequate bonding, and no longer guarantees
wholeness.

Clearing trades balances longs and shorts, buyers and sellers but doesn't ensure
payment without some type of insurance.

IMHO clearing normally excludes specs which move markets much quicker than
buyers when price have upward pressure, and sellers when prices have downward
pressure.

Specs also allow moving product for cash purposes while protecting loss of
opportunity.

Problem with developing contracts is building volumes... both trades and specs..
needed for liquidity.

Cottonpicken's idea of the CWB becoming a huge brokerage/clearing house/security is
very sound IMHO. I spoke about the culture yesterday.

The Allan Johnstons etc. could easily be the customer interfaces, the Brokerage could
secure payments... a contingency fund for trades, Export Development Canada for
exports.

Freight could be brokered.. unit trains ...BTrains.. or wheelbarrows.

This business could deal in fuel, precious metals, fertilizers or holiday excursions....
whatever.

Bottom line is to secure payments to all, and to have a competitive broadly used
medium.

Farming is very risky, and very expensive... managing risk is imperative.

Without a market that is trustworthy, liquid, customer focussed, and active we will be
accepting purchaser friendly contracts, one sided demands from RR's, and continue to
be vulnerable buyer bullying as we have in malt barley.

Perhaps the WBG etc. have better ideas, but bly has been a tough contract to trade
with reasonable volume. After Aug. 01 this may change... but we have many, many
products that need better price discovery and payment security in my opinion.

I could be wrong... Cheers... Bill

[TOM4CWB]

Parsley,

You can lead a horse to water but you cannot make it drink.

Risk Management costs $$$.

If folks choose to take the risk... reap the rewards... that is their choice.

Logical Rational and Reasonable.

There are always speed bumps... MF being one of them. We get over it... move on and count it as a cost of doing business.

Losses caused by the CWB are 1000's of times greater than the MF problem for us.

A state of mind... risk management tools cost and have risk in them themselves.

Clear in Aussieland has a great platform. If there is a need... the tools will migrate to western Canada.

A great opportunity for the CWB to offer stability and handle diverse crops... would be to be the agent for a Clear system in Canada.

[malleefarmer]

Tom i have tonnage on clear at the moment. I priced it just above the market, its set and forget if the market rallys i get a hit it gets sold,i dont know the buyer,the buyer doesnt know me, buyer pays money into a clearing house in 5 days once cleared the clearing house pays me 2 days later.
tilte transfer once money is cleared in clearing house,if any trouble the grain title is not transferred i keep the grain.

[cottonpicken]

Mf global is a huge deal.

I just heard the number maybe 5 billion.

There are accounts everywhere that are at
risk,mutual funds,401k,deposit accounts,etc,etc.

They are not safe.

Tom,if you would have been the one that lost a few
hundred grand i imagine those rose colored glasses
would be off pretty quick.

[Burbert]

Cheques that don't bounce are always a
good sign of things ta come.......

[TOM4CWB]

C.P.

I have become more risk adverse in my old age... no doubt.

MF happened... it wasn't caused by me. We had an account with MF... I try to deal directly on risk management with the folks we market our grain with. Over time more of positions become less speculative and marketing that strives on relation based sales direct to end users.

Just the way we have developed over time in our marketing system.

You are a specialist in what you do. Great. Good that we are all different... provides for more opportunities!

Cheers!

Merry Christmas!

All the best in 2012!