* CFTC turns back the clock with "new" rule
* Measure increases CFTC oversight of CPOs, CTAs
* Latest action by CFTC following MF Global collapse
By Christopher Doering
WASHINGTON, Feb 9 The Commodity Futures
Trading Commission approved a rule on Thursday designed to shed
more light on trading in the futures and swaps markets, the
agency's latest effort to protect customers following the
collapse of MF Global last October.
The rule, which was approved 4-1 in private by the CFTC's
five commissioners, would require investment companies such as
mutual funds that invest in commodities to register with the
CFTC. It reinstates measures in place prior to 2003.
The CFTC said the rule would help the agency increase its
oversight of commodity pool operators - an entity where funds
from multiple investors are combined to trade or to invest - and
commodity trading advisors.
"The financial crisis, and now the collapse of MF Global,
highlights the need for more accessible and effective customer
protection measures," said Scott O'Malia, a Republican CFTC
"These rule changes will remove a major loophole that has
allowed certain funds to market and sell investments in
commodity futures markets, but remain outside the jurisdiction
of the Commission," he said.
The changes were first proposed by the National Futures
Association, one of the CFTC's self-regulatory organizations, in
August of 2010.
Jill Sommers, the other Republican commissioner, was the
lone dissenter. She said the CFTC went beyond what was needed to
address NFA's concerns, and it risks "disrupting a significant
number of business structures."
"While I agree that the Commission has a regulatory
interest in the activities of commodity pools, this overstates
the case and gives a false impression that the data we gather
will enable us to actively monitor pools for systemic risk, that
we have the resources to do so, and that we will do so," she
said in a statement.
The rule, which was first proposed by the CFTC on January
26, 2011, will go into effect 60 days after its published in the
government's federal diary.
MF Global filed for bankruptcy on Oct. 31 after investors
and customers became rattled over the firm's $6.3 billion bet on
European sovereign debt. Investigators are still trying to find
more than $600 million in missing customer money.
The collapse increased pressure on the regulator to ramp up
efforts to boost protection and segregation of customer
In recent weeks, the CFTC approved rules that restrict the
investment of futures customer funds, and another that protects
cleared swaps customer contracts and collateral. It also
recently concluded an industry-wide spot check of major futures
brokerages, and did not find any material breaches of customer
In addition, Reuters reported earlier this month that Gary
Gensler, the chairman of the CFTC, ordered an extensive review
of how futures brokerages are regulated by the agency.