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Hey RTers,
I have been having a discussion off group about the Niederhoffer
situation and a response I received was that Refco had offsetting
position for their house account and the statement below was made.
I believe this to be totally false (clearing firms do not take
offsetting positions in the futures markets, they simply monitor the
customers ability to pay for losses), but I wanted your confirmation as
back up.
Eric
JER3CUBE wrote:
>
>
> HI again, Eric,
>
> I don't think you will read this anywhere....but, it is my understanding that
> clearing brokers try to close there own books flat for the day.
>
> If they have 10 customers long silver and 10 short...(assume equal amounts)
> then from the clearing brokers position the firm is "flat" or neutral.
>
> Have 1 more on either side....the firm can...for a limited amount take
> an "offsetting" positon....fully hedged.....and the margin required
> for the firm is reduced....allowing more money to be put at interest.
>
> If one of their clients is over balanced in one direction....the firm
> offseet....amounts to a bet against their own customer.
>
.....
>
> All the best,
>
> GerryB/jer33:3
> learner/teacher
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