How MF Global will change customer fund supervision

Author: Danielle Myles | Published: 21 Nov 2011
Controls on futures and over-the-counter (OTC) customer funds will be stricter following allegations of MF Global’s (MFG) use of customer funds in the days before its collapse.

The question is how heavy-handed this and other post-MFG reforms will be, and how long before foreign and the US securities markets adopt similar requirements.

Pending the outcome of investigations into the failure of the futures broker and its segregation shortfall, the brokerage industry is mooting how collateral segregation and its record-keeping practices will change.

Irrespective of the cause of MFG’s shortfall, now estimated at $1.2 billion according to the Financial Times, the Commodity Futures Trading Commission’s (CFTC) proposed swaps clearing rules under Dodd-Frank will tighten fund and collateral segregation.

"The CFTC’s approach to clearing must take into account...