Duffy: Markets are Safer a Year after MF Global

Terry Duffy OpenMarkets

 

MF Global’s failure occurred one year ago, and the industry is still recovering from the collapse. In an oped today in Futures Magazine, CME Group Executive Chairman Terry Duffy writes about how the historic event shook the industry:

It was a sharp wake-up call for those of us – in both the private and public sectors – whose most important job is to keep our markets safe and secure. Prior to these events, we operated under the unchallenged assumption that firms would not break rules and regulations to misuse customer funds. The segregation of customer funds had been sacrosanct since the 1800s. One transgression would have been unacceptable, and yet in the last year we saw this happen twice. Our market participants need, expect and deserve a marketplace they can rely on for price discovery and risk management across all asset classes. Restoring confidence and protecting customers when using our markets are essential.

He also writes about the measures taken in the past year to make markets safer today than they were before the MF Global collapse:

    • Stepped-up surprise reviews of customer segregated funds that have led to nearly 50 “spot reviews” since May 1.
    • Daily segregation reporting by all futures commission merchants since May 1, resulting in over 10,000 daily customer computations to date at CME alone.
    • More than 500 submissions since July 1 detailing how each firm is investing its segregated customer funds.
    • The “Corzine rule” which holds CEOs and CFOs accountable for disbursements of more than 25% of excess segregated funds held at the firm level.
    • Electronic account balance confirmations and, still to come, new rules providing CME and NFA direct, real-time online access to firms’ customer segregated fund balances at any time.

Read the full article at Futures Magazine.

Debbie Carlson has focused on commodities for much of her writing career. She spent more than a decade at Dow Jones covering the Chicago-based futures exchanges. As a Dow Jones editor, she worked closely with The Wall Street Journal and Barron's in planning commodities coverage.

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