CFTC reconsiders rule to restrict use of customer funds after MF Global collapse
The CFTC is reconsidering a rule restricting the use of client assets in light of the collapse of colossal broker-dealer MF Global. The proposed rule, now nicknamed the “MF Rule,” was first published in November 2010.
The MF Rule would narrow the number of permitted investment instruments for client assets, require that these instruments be “highly liquid,” impose new concentration limits, remove rating requirements, and revise conditions on the use of money market mutual funds.
Vote on the rule was originally delayed to allow more time for discussion, however the CFTC is now expected to vote on December 5th.
CFTC Supports Trustee’s Request to Move MF Global “Cash-Only” Accounts
The CFTC filed a statement in the MF Global bankruptcy case yesterday to support the Trustee’s application for an expedited claims process in the liquidation of the failed futures commission merchant (FCM), and authorization to transfer customer “cash-only” accounts outside of the claims process.
The CFTC expressed support for putting in place mechanisms for the transfer of 60% of customer funds that have been frozen in “cash-only” accounts to other FCMs, where those funds will be accessible to the customers.