Tag Archive for: derivative industry

Melinda Schramm: Founder and Chairman of The National Introducing Brokers Association (NIBA)

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Melinda SchrammBy Jessica Darmoni

“What an incredible purpose the derivatives markets play… price discovery and risk management together represent a massive economic purpose for being,” says Melinda Schramm. “Beyond traditional and agricultural markets, they are essential in emerging markets, shaping how we manage risk and our future. I am proud to be part of something that is essential to the American value of life.”

After more than four decades in the derivatives industry, Melinda Schramm still approaches the markets with the same clarity of purpose that first drew her in, because this work matters to her. The Glass Hammer first met Schramm in 2009 as Founder and Chairman of the National Introducing Brokers Association (NIBA). Since then, Schramm has spent her career not only navigating the complexities of futures and options products, but also helping others understand their essential role in the global economy. Today, NIBA is focused on educating their members and advocating for the Introducing Broker (IB), Commodity Trading Advisors, accountants, lawyers and market participants that have joined the NIBA network. Schramm’s work also continues in a new and evolving context that includes emerging products like prediction markets and crypto assets, and an ongoing dialogue with regulators.

A Voice in a Changing Regulatory Landscape

While speaking with The Glass Hammer, Schramm is preparing a comment letter to the Commodity Futures Trading Commission on behalf of Introducing Broker (IB) members of NIBA. The topic is prediction markets, which is an area drawing increased attention as regulators seek input on how these platforms should function within the broader derivatives ecosystem.

For Schramm, the issue comes back to first principles. Do these markets serve a legitimate economic purpose?

“Price discovery is critical,” she emphasizes. “But we also need to understand how that price is formed and disseminated in prediction markets, and whether it contributes meaningfully to the system.”

The response from the IB community so far has been measured. Many are taking a “wait and see” approach, not out of resistance, but out of a need for deeper understanding. Prediction markets represent a shift—one that requires education before adoption.

“There’s interest,” Schramm notes, “but also a recognition that we need to understand how to approach it responsibly.”

Her comment letter reflects that balance: openness to innovation, paired with a clear focus on purpose, transparency, and market integrity.

Understanding the Purpose of Derivatives

That focus on purpose has been a constant throughout Schramm’s career. While derivatives markets are often viewed as complex or opaque, she sees them as fundamentally practical.

From agricultural hedging to managing financial risk, these markets allow participants to navigate uncertainty. They enable businesses to make decisions with greater confidence and stability.

“Once you really understand the futures and options business,” she says, “you see how essential it is, not just to specific industries but to the broader economy.”

That perspective has shaped her leadership and her long-standing commitment to education. Early in her career, she recognized that many people, even those in finance, lacked a clear understanding of how derivatives function.

Building Knowledge in a Fast-Paced, Ever-Evolving Industry

When Schramm first entered the industry, trading floors served as informal classrooms. They were places where newcomers could observe, ask questions, and learn by immersion. Today, those entry points no longer exist.

In response, she has helped build more structured pathways into the industry through education and outreach. Working through NIBA, she collaborates with institutions like DePaul University and the Illinois Institute of Technology Stuart School of Business to introduce students to the realities of derivatives markets.

“These efforts go beyond trading,” she says. “There are a wide range of roles that support the industry, including legal, compliance, operations, and technology. Many students have never heard of key functions like Futures Commission Merchants (FCMs) or Introducing Brokers.”

But once they do, something shifts.

“They start to see how the whole system fits together,” she explains. “And then they begin to see where they might fit within it.”

Lifetime Lessons from the Markets

Schramm’s longevity in the industry has required constant adaptation. Markets evolve daily, shaped by new data, global events, and regulatory developments. The ability to adjust quickly is not optional but essential.

“I tend to overthink decisions,” she admits. “But this business doesn’t allow for that. You have to be able to change your focus on a dime.”

Equally important is the ability to listen. Whether working with clients or engaging in regulatory discussions, understanding what is truly being asked—and what is actually needed—requires careful attention.

Resilience is another defining trait. Mistakes happen, especially in a fast-moving environment. Schramm’s approach is straightforward: address the issue, fix it, and move forward.

“You can’t take everything personally,” she says. “It’s about learning and continuing.”

Navigating Change and Challenging Assumptions

Over the course of her 50 year career, Schramm has also witnessed shifts in workplace dynamics. When she first started, women were rare in the field and often met with mixed reactions—either dismissed or treated with a kind of over-cautiousness that limited their effectiveness.

While progress has been made, challenges remain. Even today, she occasionally finds herself in rooms where she feels underestimated, whether due to gender or age.

“There are moments where I feel like I have to raise my hand to be heard,” she reflects. “There aren’t many women at this stage of life sitting at those tables.”

Yet her continued presence, and influence, speaks for itself. With decades of experience, she remains deeply engaged with modern markets, from traditional commodities to emerging digital assets.

Looking Forward

As Schramm helps lead preparations for NIBA’s 35th anniversary gathering this July at DePaul University, her focus is both forward-looking and grounded in experience. The event will address emerging topics like prediction markets while also recognizing the individuals who have shaped the industry with the introduction of a NIBA Hall of Fame, sponsored by the CME Group.

However, for Schramm, the work is ongoing. Whether through education, advocacy, or direct engagement with regulators, her goal remains consistent: to ensure that derivatives markets continue to serve a meaningful purpose.

That purpose, rooted in price discovery, risk management, and economic stability is what has sustained her career.

And as new markets emerge and new questions arise, it is also what continues to guide her voice.

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Futures Industry Gathers in Boca to Discuss Where Risk Management Ends and Gaming Begins

Futures Industry Boca prediction marketsBy Jessica Darmoni

The Futures Industry Association (FIA) held their annual FIA Boca conference in Boca Raton, Florida March 8-11, 2026. The annual gathering brings together institutional investors and professionals in the listed and over-the-counter derivatives markets with an emergence of digital asset firms and retail brokers joining in the past few years.

One of the hot topics this year was the rise of prediction markets, which can be a useful risk management tool enabling participants to hedge against uncertain future events. However as these markets evolve, there is growing concern about when they cross the line from risk management tools to gaming and speculation?

A Repackaged Product

From a structural perspective, prediction market contracts are not new. Many of them are variations of instruments the financial industry has traded for decades. Most operate as fully collateralized products known as binary options. Binary options are contracts that only pay out a fixed amount if a specific event occurs. The buyer will only lose what he spent to buy the option if the event does not occur.

“Everyone is looking for what is next,” says Jim Kharouf, Chief Marketing Officer at IncubEx, which designs and develops environmental derivatives. “We have seen the evolution from the institutional derivatives to e-minis, and options to zero-day contracts and so on. Prediction markets, and even crypto, are more examples of the next layers of innovation.”

While versions of these contracts have existed since the late 1990s, new players have brought a wave of excitement, and potential for scale and scope. Last year, the CME Group announced a partnership with Fanduel (they hired former Chicago Bulls player Scottie Pippen to promote the products at this year’s FIA Boca conference.) Another recent partnership between InterContinental Exchange and Polymarket has brought additional buzz to the prediction market space. Other notable names include Robinhood and Draftkings.

The collaborations represent a shift in the derivatives markets. These exchanges, which traditionally service institutional and professional traders, are introducing event-based trading to a much broader audience with consumer facing platforms. While the foundation of the product has stayed the same, it is the entrance of new participants and the events in which they are trading on, which has brought up these pressing questions.

A Natural Progression

Christopher Hehmeyer, a derivatives industry veteran who was most recently CEO of Warwick Capital, says that we must reframe the issue in terms of public perception. He wonders whether the American public sees a meaningful difference between trading a contract on the next Taylor Swift concert and taking a position in gold.

“It’s gaming on U.S. entertainment versus risk management,” he says, explaining that betting on pop culture events may feel closer to traditional gambling than financial trading.

However, Hehmeyer also points to prediction instruments that serve a clearer economic purpose. Weather contracts, for example, allow businesses and individuals to hedge against environmental risks that can be difficult or expensive to insure.

Contracts tied to weather outcomes are traded on platforms such as Kalshi, a regulated U.S. exchange that offers event-based contracts on topics ranging from economic indicators to climate data.

“If insurance is too expensive, the option to buy a weather contract hedging against a hurricane is a type of risk management,” he says. “That’s not gaming.”

In that scenario, a business located in a hurricane-prone region might buy a contract that pays out if a storm strikes its area. The payout could offset revenue losses caused by the disruption, functioning similarly to an insurance policy.

This illustrates the central challenge regulators face. The same financial instrument can be used in very different ways. A coastal business might use a hurricane contract to hedge real financial exposure, while a retail trader in another state might simply be speculating on the outcome.

The debate therefore often centers less on the structure of the contract and more on the underlying event being traded. As prediction markets expand, this distinction is becoming increasingly important.

A Regulatory Impact

Finally, another complication is the regulatory framework itself. In the United States, prediction markets exist in a complex environment overlapping financial regulation and state gambling laws. Some contracts are treated as derivatives, while others may be restricted depending on how regulators interpret their purpose. Also, states may lose out on potential tax revenue, if there isn’t regulatory certainty and federal legislation, as trading activity shifts to platforms that operate outside of traditional gaming structures.

While prediction markets may be part financial innovation and part speculative entertainment, it is clear that the underlying idea is gaining momentum. As technology makes it easier for individuals to trade on real-world outcomes, prediction markets may become an increasingly visible part of the financial landscape. It is now up to the regulators and policymakers to decide where the line is drawn between real-world risks and betting on the unpredictable.

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