CFTC Completes Client-Funds Rule After MF Global Collapse

[ProSense]

Source: BusinessWeek/Bloomberg

Dec. 5 (Bloomberg) -- U.S. derivatives regulators voted today to restrict how brokers can invest customer funds, acting on a delayed rule after as much as $1.2 billion went missing before MF Global Holdings Ltd. sought bankruptcy protection.

The Commodity Futures Trading Commission voted 5-0 at a Washington meeting to limit how brokers invest clients’ margin in money market funds, and ban investments in foreign sovereign debt and in-house transactions such as repurchase agreements.

CFTC Commissioner Bart Chilton, one of three Democrats on the five-member panel, has pushed for completion of the measure, which he dubbed the “MF rule.” CFTC Chairman Gary Gensler, said the rule “is critical for the safeguarding of customer money” by preventing in-house repurchase transactions.

<...>

The rule under consideration today overturns a policy, instituted in 2005, that let brokers invest client funds in in- house transactions. It bans such trades by brokers, who earn interest income by investing the funds, while allowing deals with third parties, according to a CFTC summary.



Read more: http://www.businessweek.com/news/2011-12-05/cftc-completes-client-funds-rule-after-mf-global-collapse.html

[DCKit]

1. Too little, too late.

But it's good to know that only the "little guys" got screwed over. MF warned their large stakeholders in plenty of time for them to empty their accounts.

[pam4water]

2. No worries they probably wont enforce them way they don't enforce any of the other anti-fraud laws.

[ProSense]

3. At

"No worries they probably wont enforce them way they don't enforce any of the other anti-fraud laws."

...least there is now a rule to enforce, and you never know.

[pam4water]

4. Yeah but now it's going to federal court. Where it be OK eventually AT&T will sell off some stuff

then buy it back when no one is looking.