

Current DateTime: 03:41:46 23 Feb 2012
LinksList Documentid: 22528753“This was a bucket of cold water in the face” for regulators, said Bart Chilton, a Democratic member of the commission, who is championing the insurance fund, among other changes. Regulators and the trustee with the job of returning money to customers have traced most of the missing futures money to an assortment of MF Global’s banks, securities customers and trading partners, people briefed on the case have said. But clawing the money back will be daunting, because some of these recipients were entitled to payouts from MF Global. The delay has shaken the firm’s clients, a mix of hedge fund traders and farmers, who are still lacking nearly a third of their money. Over the last few months, the breach of customer accounts has become the subject of a sprawling federal investigation. Federal prosecutors in New York and Chicago, the F.B.I. and the Commodity Futures Trading Commission are all examining potential wrongdoing. The case also carries ramifications beyond the courtroom — and even MF Global. The broader futures industry now faces a wave of regulations that seek to avert a repeat of MF Global’s sins. The seeds of an overhaul are seen in the list of policy ideas circulating the trading commission. The list features several ambitious ideas, like a plan that would force the agency to keep a closer eye on so-called self-regulators, private firms that police the futures industry. Other ideas are more modest, including requiring brokerage firms to regularly disclose the safety of the money of their customers. Currently, most futures firms must share their reports with regulators only monthly. Another item likely to be discussed at the meeting next week is a plan to modify the agency’s bankruptcy rules that govern how customers’ assets are doled out when a firm collapses. MF Global customers have complained that they are at the back of the line in the claims process, behind the firm’s banks and creditors. Sensing a crackdown, the industry has moved to produce its own ideas for change. The Futures Industry Association, an influential trade group, created a task force to study policy changes. Self regulators, groups like the CME Group and the National Futures Association, have formed a similar committee. Capitol Hill has weighed in, too. The Senate agriculture committee last month sent letters to a range of industry players, seeking their input on whether Congress should draft new laws in response to the MF Global debacle. “A central principle of the futures market was broken and a good dose of the rule of law is probably the first step toward bringing back confidence,” said Jamie Selway, a managing director at ITG, a firm that operates an electronic equities and futures business. “The question is how do you do it?”This story originally appeared in The New York Times
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