The CFTC recently issued final rules requiring future commission merchants (“FCM”) to adopt risk management programs that take “into account risks to which the FCM is reasonably subject, including risks relating to operations, capital, and customer fund segregation.” The rule requires FCMs to develop written policies and procedures to, among other things, protect segregated customer funds.
CFTC Commissioner O’Malia dissented from the final rules enhancing protections for customers of FCMs and derivatives clearing organizations. He stated that “[i]nstead of mitigating customer risk, the rules create a false sense of security by imposing broad and ambiguous requirements and introducing another layer of governmental oversight. Even worse, they force a change in a longstanding and generally accepted industry practice that will likely result in seriously harmful consequences for small FCMs and their end-user customers.”
A fact sheet on the final rules is available here.
Commissioner O’Mailia’s dissent is available here.