Man Group to bypass Exchanges...

Man Group? Who is this you ask? From the Horses mouth:

Man Group plc is a leading global provider of alternative investment products and solutions as well as one of the world's largest futures brokers.

Man Investments is a global leader in alternative investments. It has spent two decades understanding investor requirements, identifying opportunities, and developing leading edge products and tailor-made solutions for private and institutional investors. Each of Man’s core investment managers – AHL, Glenwood, Man Global Strategies and RMF – has distinct expertise in one or more alternative asset classes: hedge funds, leveraged finance and convertible bonds. Man continues to explore opportunities across the alternative investment spectrum in order to enhance its client offerings. Hedge funds are the cornerstone of the business, and Man offers a range of risk/reward profiles through its funds of hedge funds, structured, style products and single manager products. Man Investments manages around $54 billion (as at 1 June 2006) and has a powerful global distribution network.

In the hedge fund asset class, which is the major part of the business today, Man offers funds of hedge funds, structured, style and single manager products. Its track record stretches back two decades and defines the standard for excellence in an industry whose central goal is to provide diversification away from traditional equity and bond investments. Man has a powerful global presence and an extensive network of distribution partners.

Man Financial, the Brokerage division, is one of the world's leading providers of brokerage services. It acts as a broker of futures, options and other equity derivatives for both institutional and private clients and an intermediary in the world's metals, energy and foreign exchange markets with offices in key centres. Man has consistently achieved a leading position on the world's largest futures and options exchanges, with particular strengths in financial futures and the energy markets.

OK, if you don't get the definition work on it. This is one of the largest Hedge Funds on the planet and they are involved in everything. They purchased Refco, the collapsed futures broker in 2005 and have since rebuilt that business substantially. Their portfolio is thus:

Funds under management of $26.1 billion at 31 March 2003, including
$11.1 billion in RMF , which was acquired on 30 May 2002. Excluding
RMF, funds under management were $15.0 billion, up 40% from last year

So what is all the boring detail about? They just nabbed 70% of Eurex US, a really bad name chosen by Deutsche Borse when they tried to create a competitive futures exchange to the CBOT in 2004.

Why is this an issue? Simple, Man will be looking for equity partners from their brethren to join them in essentially doing something quite original; Bypassing the CBOT in the trading of their products.

I am no genius in this area but I smell a big fish. You will have a huge unregulated industry (Hedge Funds) creating its own trading floor to trade its own products.

Grabbing more retail clients and more money is the easy part, avoiding the balance sheet and position limit restrictions that apply in over-the-counter derivatives trading is the hard part. Now it is done.

Who is going to regulate this activity? How in the regulation field has the resources to understand and keep up with this industry? The SEC in the US was just told by US courts to back off the Hedge Fund industry so they are not even allowed to require Hedge Funds to register existence!

Now the Hedge Fund industry is going to MAKE THE RULES for it's own trading in "products" that few outside the industry understand, even fewer understand the implications of failures in this industry and even fewer still have any ability to set limits on what this industry has the capability to do.

Just a note: Notice there is no national orientation mentioned in it's self made description except to note it's primary listing on the London Stock Exchange. Also, note the repeated use of the word "world's" and the reference to "global". These organizations that control about $1.5 trillion (no one actually knows) have NO ALLEGIENCE TO ANY NATION OR CITIZEN other than making money, as much as possible, for the wealthy clients who are allowed by various governments to invest in them.