Financial Regulatory Forum

Futures customer protections improved in U.S. and overseas after frauds

By Nick Paraskeva

NEW YORK, July 17 (Thomson Reuters Accelus) - The CFTC approved tough customer protection rules for futures firms’ days after the Peregrine default led to over $200 million in missing client funds. Losses arising from a fraud by the owner of the futures broker come soon after a $1.6 billion hole in client funds from the collapse of MF Global. The new rules require daily calculations of client money to be reported, and for senior management to certify cash movements.

The CFTC charged Peregrine Financial Group, and its owner Russell Wasendorf, Sr, of misappropriating customer funds. A recent audit of Peregrine by the National Futures Association (NFA), the self-regulator for independent futures firms, found the firm falsely represented it held $220 million customer funds at a bank account, which only had $5.1million. The firm filed for liquidation Friday, and its owner was arrested. (more…)

New OTC swaps rules must apply to all – U.S. regulatory official

WASHINGTON, March 2 (Reuters) – Congress should not create blanket exemptions for end users from new rules designed to make trading of the over-the-counter derivatives more transparent, a commissioner on the top U.S. futures regulator said on Tuesday.

Michael Dunn said the Commodity Futures Trading Commission should be given the authority to exempt end users from requirements to trade and clear standardized derivatives on a case-by-case basis, but recommended against a broader exemption currently being considered by Senate committees.

“Allowing such a large class of transactions to be exempt from clearing would mean that dealers would have more risk on their books. If these dealers fail, this risk could affect the entire financial system,” Dunn said in remarks prepared for a National Futures Association regulatory seminar in Chicago.

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