From the November 01, 2012 issue of Futures Magazine • Subscribe!

Restoring confidence in the post-MF Global world

According to Corcoran, the FIA has received eight responses from different segments of the consulting world for a study on an insurance fund and is hopeful the findings will be ready by 2013.

Another area that may require attention is the bankruptcy code. “What happened after the bankruptcies was we didn’t have the authority to release the collateral along with the positions, so that created disruptions in the marketplace,” Durkin says. “We are proposing that Congress amend the bankruptcy code to allow clearinghouses that hold sufficient collateral that support the positions of failed firms to be able to move promptly with the transfer of those positions.”

Next year is a reauthorization year for the Commodity Exchange Act, and Lukken says that may be a time to propose changes. 

Corcoran has suggested that FCM chief financial officers (CFOs) meet industry criteria for their position. “There should be a registration specific for CFOs so that the industry can be assured that they have a minimum level of knowledge of the rules. There is in the securities world,” he says. 

A year ago the futures industry regulatory approach stood as a model for the rest of the financial world, but MF Global and PFG undercut the bedrock of trust in segregated funds. The industry has responded with changes, but more may be needed. “We’re open to any additional suggestions to enhance the confidence,” Durkin says.

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