DERIVATIVES DIARY: The Day The Plumbers Took Over

The futures industry welcomed a new brand of hero this week, wielding knowledge of derivatives markets' inner workings, and maybe a toilet plunger.

Exchanges and brokers arrived at their midwinter gathering in Florida prepared to anoint a new leader of the Futures Industry Association, its chief lobby group, and wound up with a new boss for the world's largest futures exchange operator, CME Group Inc. (CME).

New FIA President Walt Lukken and CME's Chief Executive-elect, Phupinder Gill, both spent stretches of their careers overseeing trade-clearing operations, known as the piping that keep futures trade flowing.

"I consider myself a plumber," declared Lukken, speaking at a press event. "This is a time when we're going to roll up our sleeves and solve problems, so who better than plumbers to unclog the clogs and fix the leaks?"

For some, the concept of superhero plumbers conjured images of turtle shells, magic mushrooms and Nintendo, though less was said about their exorbitant hourly rates.

 
   Dear John

The clogs and leaks concerning Lukken provide an apt metaphor for an industry staring down the hole created by the collapse of MF Global Holdings (MFGLQ), a pivotal event that has brought its players closer together, in part so they can apply a do-it-yourself fix before regulators arrive with their own--possibly more costly--solution.

Those bonds were on display Tuesday night in a sometimes-emotional send off for outgoing FIA President John Damgard, which drew prominent members of the global futures club, gathered to pay tribute to their chief advocate of the past three decades.

One observer suggested that he had not seen so many teary-eyed futures traders since the Chicago Board of Trade launched side-by-side trading, paving the way for screens to displace its storied pits.

 
   CFTC Hits Snooze Button For Swaps

U.S. regulators have been criticized for rushing new rules that would govern trade in the multi-trillion dollar swaps market--and for moving too slowly. But days after the clocks moved forward an hour, Commodity Futures Trading Commission Chairman Gary Gensler on Wednesday said he's not interested in springing forward to finalize rulemaking under the Dodd-Frank financial law.

"We are completing rules in a thoughtful, balanced way to get them right, not against a clock," said Gensler. Like clockwork, he repeated the point three separate times in remarks Wednesday.

 
   Dealbreaking

Florida is famed for orange juice, but at times it seemed the state's new commodity could be sour grapes.

Exchange leaders involved with all four of the past year's failed merger efforts were on hand and some aired occasional grievances toward the regulators responsible for shooting down most of the deals. Singapore Exchange (0068.SG) CEO Magnus Bocker turned wistful on the topic of his failed quest to acquire

Australia's ASX Ltd. (ASX.AU): "I still believe it was a good trade, for both sides."

NYSE Euronext's (NYX) derivatives boss Garry Jones in turn chided IntercontinentalExchange Inc. (ICE) CEO Jeff Sprecher for dumping on the Big Board's stewardship of its futures business, back when ICE joined with Nasdaq OMX Group (NDAQ) in a rival offer for NYSE a year ago.

"It was good to hear we didn't commit to derivatives, we had poor management and that Jeff could do a better job," Jones said dryly during a panel appearance.

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

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