The Commodity Futures Trading Commission (CFTC) is closing in on rules designed to make the futures market safer in the wake of the implosions at MF Global Holdings Ltd. and Peregrine Financial Group Inc., the Wall Street Journal reported yesterday. The CFTC is expected to recommend as early as this week a package of rules, including a provision that could require futures brokers to put aside about twice as much collateral than firms currently must hold. Trade group Futures Industry Association has estimated that the proposal could require brokers or their customers to put aside roughly $100 billion more in collateral. The agency is also expected to approve rules giving regulators electronic oversight of customer accounts and a new requirement, dubbed the "Corzine rule" for former MF Global Chief Executive Jon Corzine, that requires CEOs to sign off on any significant transfer of customer money. The CFTC said it is trying to strengthen rules for brokers after more than $1 billion was taken out of MF Global customer accounts to keep the firm afloat as it spiraled toward bankruptcy and in the wake of the July 2012 disclosure by the founder of futures broker Peregrine that he stole $215 million in customer funds. Most of the rules have garnered broad support from the industry and have already been implemented by the National Futures Association, the industry's self-regulatory body. But one rule has sent ripples across the industry because it is expected to increase the amount of money firms have to set aside as collateral.
