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CFTC to vote on rule opposed by MF Global

Bart ChiltonThe Commodity Futures Trading Commission will vote on Dec. 5 on a rule that would eliminate ability of brokerage firms to invest customer funds.

"I think we have seen and heard quite enough on this rule and I have urged that we move forward on it at the very earliest opportunity," Bart Chilton, a Democratic commissioner at the CFTC, said, according to Reuters.com.

The rule was opposed by MF Global, the recently bankrupt holding company for the broker-dealer run by ex-Goldman Sachs Group Inc. co-chairman Jon Corzine.

The Commission proposed the rule in order to prohibit the brokers’ practices of investing their clients’ excess margin or collateral for future trades in corporate notes, bonds and commercial paper, Reuters.com reports.

Many financial groups, including MF Global, lobbied against the rule, which would be a revision of Rule 1.25 of the Commodity Exchange Act.

If the rule were approved, it would also set a limit on the amount of customer margin that can be invested in municipal bonds, agency securities, money-market funds and municipal securities. In addition, it would eliminate repo transactions made with an affiliate.

The CFTC is making slow progress on implementing many of the rules required by last year’s Dodd-Frank Act, including several rules that would address the $600 trillion over-the-counter derivatives market.

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