Exclusive: MF Global triggers regulatory rethink at CFTC

Wed Feb 1, 2012 5:07pm EST
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By Christopher Doering

WASHINGTON (Reuters) - The head of the Commodity Futures Trading Commission has ordered an extensive review of how futures brokerages are regulated, following the collapse of MF Global three months ago, a CFTC official told Reuters on Wednesday.

CFTC Chairman Gary Gensler ordered the review after questions emerged about whether the CFTC or exchange-operator CME Group, whose self-regulatory arm served as MF Global's front-line regulator, could have done more to prevent the firm's collapse and safeguard customer money.

MF Global had nearly a half dozen regulators policing various parts of the firm, but no single regulator was responsible for the whole company.

Gensler has directed the agency's Division of Swap Dealer and Intermediary Oversight to find ways to bolster agency regulations for how it oversees and what it requires from self-regulatory organizations and futures commission merchants such as MF Global, the official told Reuters.

The review includes changes to the CFTC's own internal policies and procedures and possible calls for congressional action. It is not clear what the specific recommendations will say.

"There is a whole package of recommendations that staff has drafted at the direction of the chairman to bolster our current regulations," said the CFTC official, who was not authorized to speak on the record.

"I think, absolutely, I would say these are a direct response" to MF Global, the individual said.

A CFTC spokesman could not be reached for comment.   Continued...

<p>A woman leaves the office complex where MF Global Holdings Ltd have an office on 52nd Street in midtown Manhattan October 29, 2011. REUTERS/Andrew Kelly</p>