Voice of Experience: Melinda Schramm, founder of the National Introducing Brokers Association (NIBA) and owner of MHS Capital Resource

By Jessica Titlebaum (Chicago)

Melinda Schramm is the founder of the National Introducing Brokers Association (NIBA), the writer of the industry’s only guide for Introducing Brokers (currently circulated by the CME Group) and the owner of MHS Capital Resource, an NFA registrant. A lawyer by training, Schramm decided to go into finance after being physically threatened on her prior job. Knowing she needed a change, she answered an ad in the Chicago Tribune and went to work in a newly created compliance department at Green & Collins (known today as the Rosenthal Collins Group).

Now, more than 30 years later, “Melinda is considered a matriarch to the leaders in the financial arena of Introducing Brokers,” said Karen Bertoli, Director of Communications Strategy at Zen-Fire and an affiliate member of the National Introducing Brokers Association (NIBA).  “I have been lucky enough to enjoy her leadership through NIBA and her friendship outside the office.”

Schramm moved from Green & Collins to a non-clearing futures commission merchant (FCM) called Delta Commodities.  Due to advancements in technology, Delta Commodities was able to launch agricultural field offices.  As Vice President for Business Development, Schramm oversaw operations and the company launched 103 branches in 3 years.

“Electronics enabled the owners of feed lots and grain elevators to follow the markets minute-by-minute. They became our agent offices,” said Schramm.  “Women played a role in this process as they were often the only people in the offices who had taken and passed the Series 3 qualifying exam. Women on the farm participated actively in the process by calling in orders when their husbands were in the fields.”

Schramm later worked at BRC, a division of Index Futures Group, and R.J. O’Brien. At both companies, she was responsible for IB and retail growth, and for innovating product and market strategy for the retail market user.

Reevaluating Life and Business

In 1991, Schramm suffered a heart attack that left her out of work for six weeks.  That time off gave Schramm the chance to evaluate her life. She decided that she needed to make some changes.  She also recognized the market transformations taking place, including the growing importance of electronic trading and 24-hour trading access.  While Introducing Brokers were not yet jumping on the technology bandwagon, they were noticing the impact that foreign markets were having on the local markets.  Schramm recognized a need in the industry for an organization catering to issues specific to Introducing Brokers.

She launched the National Introducing Brokers Association that same year as a forum for IBs to discuss the changing landscape and to provide networking and educational opportunities.  She did not expect the association to take on the political presence it has today. NIBA membership is open to Introducing Brokers, Commodity Trading Advisors and anyone who focuses on the retail sector of the business.

“The National Introducing Brokers Association has provided a great platform for IBs to discuss regulatory issues throughout the years,” said Larry Dyekman, the Director of Communications and Education at the National Futures Association. “We have participated on various panels regarding sales practices and promotional marketing materials.”

Besides their interactions with the NFA, NIBA members have also spoken to the Commodity Futures Trading Commission’s (CFTC) Agricultural Advisory Committee and before the U.S. House of Representatives. Schramm has shared her views on “hedge to arrive” contracts, participated in a series of meetings the CFTC held to discuss preserving the integrity of the markets with the influx of automated trading, and opined on various derivatives policies. She continues to champion the very important role IBs play in providing risk management services to farmers, hedgers and the retail investors.

Looking Back – Increasing Presence Technology and Women

Currently, Schramm is the permanent chairman of the National Introducing Brokers Association and believes that the IB sector is a vital part of the industry.  She said that an IB’s success today lies primarily on how well they adapted to the advancements in technology back in the 1990s.

“If IBs understood how to electronically enter orders into a platform and what markets took what orders, they could compete at cheaper prices and better service their customers,” she said. Other IB’s decided to offer a full range of services such as cash marketing, consulting and equities products. “IBs who made good decisions then are successful businesses today.”

Schramm admits that the industry has changed a lot since her start at Green & Collins. Besides the advancements in technology, she has seen a lot more women enter the futures market throughout the years. She said that females were scarce due to long standing traditions in the financial industry and because most women did not control their own finances and relied heavily on their husbands or fathers. She also said that trading was considered “unlady-like” with all the shouting taking place on the floor.

All of these factors have changed or been completely eliminated in 2009. Schramm estimates that a 6% – 7% of IBs are owned by women today. And Schramm points out that today women occupy positions of authority in every sector of the futures business, and the numbers continue to grow.

“Today’s competition is not man versus woman,” she said. “Today’s competition is won by the person who understands this business, understands the clients’ needs and is guided by the concept and principles of integrity.”