Dodd-Frank rule passed to protect certain swaps customers

By Agri-Pulse staff

© Copyright Agri-Pulse Communications, Inc.

WASHINGTON, Jan. 11- The Commodity Futures Trading Commission (CFTC) passed more Dodd-Frank final rules today, one which protects cleared swaps customer contracts and collateral. However, although the rule takes measures to add more protections for swaps customers, it does not address MF Global. 

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“Whereas I support this rulemaking, I believe that it is important to detail its limitations, so that we do not offer market participants a misleading sense of comfort in light of the collapse of MF Global,” said Commissioner Scott O'Malia. “The Commission has much more work to do to increase confidence in the customer protections that our regulations offer.”

In his speech, “What About MF Global?,” O'Malia clearly stated that the ruling does not address MF Global. He continued to explain that the rule benefits cleared swaps customers, and not the futures customers bearing the brunt of the MF Global collapse. He said the rulemaking would not have prevented a shortfall in the customer funds of the ranchers and farmers that transact daily in the futures market, nor would it have expedited the transfer of positions and collateral belonging to those customers in the event of a collapse like MF Global.

O'Malia acknowledged that the Commission has a duty to regulate the swaps market and a duty to futures customers.

“Right now, it is unclear from this rulemaking how the Commission means to address futures customer concerns,” he said.


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