CFTC official warns about rash reforms post-MF Global
* CFTC must take quick action after MFG collapse- O'Malia * MF Global should act as "teachable moment" for CFTC * Regulators still looking for missing $600 mln in funds * By Christopher Doering WASHINGTON, Nov 16 (Reuters) - A U.S. futures regulator on Wednesday pushed for immediate action in the wake of collapsed brokerage MF Global, including a requirement that all intermediaries should hire an independent party to make sure customers funds are kept separate from the firm's own money. Scott O'Malia, a Republican commissioner at the U.S. Commodity Futures Trading Commission, said in order to show the public that segregation works and that MF Global was an isolated incident, it must act quickly. However, he warned about going too far with reforms without full knowledge of what happened at the failed brokerage. "Many have said that the failure of MF Global was not systemic and that we are lucky. I don't view it in the same light," O' Malia said in a statement laying out the "next steps" in dealing with the mess MF Global left behind. MF Global filed for bankruptcy on Oct. 31 after investors and counterparties balked at revelations about the firm's bets on risky European sovereign debt. Roughly $600 million is missing in customer accounts of the company's brokerage, and the CFTC is among the authorities investigating whether MF Global may have improperly mixed that money with its own funds. O'Malia said the CFTC must ensure that all intermediaries are in compliance with segregation requirements. The agency also must reconsider rules it is crafting to implement the Dodd-Frank financial reform law. In the three-page statement, O'Malia said it's too early to hail a proposal that would limit investments of segregated customer funds "as the solution to the MF Global problem." He also warned against a plan that would have the CFTC intervene in insolvency proceedings to facilitate transfer of customer positions and collateral in the face of a shortfall "The Commission has not actively intervened in such a manner in MF Global, and so it is questionable whether the Commission would so intervene in the future," O'Malia said. In light of MF Global's demise, O'Malia said the CFTC should ensure that clearing organizations are able to diversify their membership without introducing risk.
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