REPORTERS' NOTEBOOK: Futures Leaders Eat, Drink And Be Mary

Don't play it with the kids around, but there are times when Shaggy's "It Wasn't Me" seems an appropriate theme song for the global derivatives industry, gathered in Chicago for its annual love-in under the banner of the Futures Industry Association's Expo conference.

The sector had a "good" financial crisis, with no meltdown in the wake of Lehman Brothers' demise, and its price-discovery and clearing structure functioned while rampant mispricing of risk and under-collateralization ripped around the globe faster than you can slur "algo trader" after a cocktail.

Flash crash? That was the other guy and doll. Couldn't happen here. Have you SEEN how equities markets are structured? Have you SEEN what regulators are trying to do to fix that mess?

Regulators? Love 'em, but couldn't eat a whole one. "I feel like we are constantly saving the ball on the [goal] line," said the head of one of the largest futures exchanges when musing on what the suits are planning.

Let Them Eat Cake

The received wisdom is that the U.S. industry's two key regulators--the Commodity Futures Trading Commission and the Securities and Exchange Commission--will never break bread, much less merge. As they race through the rule-making required to cement wider financial reforms, there is one sign that the cynics may just be...well, cynical.

Gary Gensler, the CFTC chairman, said in his keynote address to the FIA conference that his opposite number at the SEC had made him cupcakes for his birthday. Mary Schapiro served up a whole tray of 20 homemade treats, all with different icings to boot. Gensler is looking to hire another 400 staff to police the wider remit created by the reforms, so Schapiro may have to dip back into the stretched global wheat market to satisfy all those cravings.

The Song Remains The Same?

CFTC commissioners -- richly praised by Gensler - were prowling the halls of the Chicago Hilton, and Mike Dunn gave an unfrosted assessment of inter-agency relations. Dunn says the only area of slippage in crafting the shape of the industry by the July 2011 deadline is in providing definitions for the multiplicity of rules embodied by the Dodd-Frank legislation.

"It's important we get these taken care of so everyone is working from the same song sheet... again that has to begin with SEC and CFTC staff working together," says Dunn. "It's an open secret... in the past, they really haven't seen eye to eye." Food fight!

Heckle And Hide

CME Group Chief Executive Craig Donohue doesn't need to laugh at his own jokes. Not when the exchange group's head of clearing, Kim Taylor, possesses the industry's most delicious and prolific guffaw. So when Donohue fired off a bon mote from the podium, it didn't take V.I Warshawski -- Sara Paretsky's fictional Chicago detective -- to trace the source of the single cackle that shot from the back of the room after only the briefest of trading halts.

No Duff Predictions

Taylor's other boss, CME Executive Chairman Terry Duffy, is famed for his political nous -- and possible aspirations -- and knows his way around Capitol Hill. Duffy offered an entry-level course in political science at a dinner hosted by the exchange as midterm election results rolled across.

Duffy, a scholar of the House of Representatives, doled out predictions for races ranging from the hotly-contested Illinois governorship to relatively obscure downstate matchups. His early-evening call that Republicans would pick up 55 seats in the House was fell only six shy of Wednesday's tally, and he stepped out from time to time to phone key lawmakers amid the vote-counting and muse on potential reverberations.

Other CME officials offered a less nuanced view. "Grassley's in! We've got ethanol!" crowed one board member, hailing the corn-friendly senator from Iowa.

Where's My Desk?

Eurex chief Andreas Preuss faces his own version of the musical chairs playing out in Washington D.C., flying back from Chicago in time for Thursday's grand opening of the new headquarters of parent Deutsche Boerse. Preuss hasn't even seen his new office, but seemed relaxed that there would be room at the inn when he arrived following the company's move outside of Frankfurt, driven by the lure of lower corporate taxes. No word on who might cut the ribbon, though Preuss downplayed the notion that entertainment legend David Hasselhoff -- whose one-time popularity in Germany still haunts many of his countryfolk -- was a shoe-in.

-By Jacob Bunge and Doug Cameron, Dow Jones Newswires; 312 750 4117; jacob.bunge@dowjones.com

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