Newspaper article International Herald Tribune

A Push to Prevent Another MF Global ; U.S. Regulator to Discuss Ways to Prevent Misuse of Customers' Money

Newspaper article International Herald Tribune

A Push to Prevent Another MF Global ; U.S. Regulator to Discuss Ways to Prevent Misuse of Customers' Money

Article excerpt

The Commodity Futures Trading Commission will hold a public roundtable next week to discuss policy changes meant to protect customers at futures firms.

A U.S. government regulator is narrowing a list of possible new safeguards for customers at futures firms, a response to the collapse of MF Global and the disappearance of more than $1 billion in clients' cash.

The Commodity Futures Trading Commission will hold a public roundtable next week to discuss policy changes, including a plan that would allow customers to trade through futures brokerage firms without keeping their excess cash there, according to a copy of the agenda provided to The New York Times.

The plan, which would allow customers to keep their cash at clearinghouses rather than brokerage firms, is gaining support in pockets of the regulatory world. The commission is also circulating an internal list of more than 10 other ideas, including keeping customers updated on the whereabouts of their money and creating an insurance fund to backstop losses in customers' accounts.

People close to the agency cautioned that the list was preliminary and could be whittled down. The agency, the people said, might issue a release in the coming weeks that outlines a few favored policy options.

A few new rules were already under consideration before MF Global filed for bankruptcy Oct. 31. In December, the C.F.T.C. limited how brokerage firms can invest customer money.

On Thursday, the agency was set to vote on a rule that would require a brokerage firm's chief compliance officer to create internal controls for protecting customers' money, an effort that began in 2010.

But the disappearance of more than $1 billion in MF Global's customer money, a significant blemish for regulators, widened the scope and the stakes of the crackdown. The fiasco, proponents of an overhaul say, highlighted gaping holes in the regulatory system that allowed MF Global to mingle customer money with firm funds. …

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