Financial service firms are mounting an aggressive campaign to kill a proposal aimed at protecting customer funds in the event that a brokerage misuses its clients’ money to cover losses. The Commodity Futures Trading Commission’s draft rules have unexpectedly emerged as one of the most hotly lobbied issues this year because they would affect the trading of futures and swaps — financial derivatives that banks, agriculture and energy interests use to hedge market risk. Public confidence in the futures industry was shaken by the loss of $1.6 billion of customer funds in the 2011 collapse of MF Global Inc. and by the theft of more than $215 million from customers of the failed Peregrine Financial Group Inc. However, the industry maintains that CFTC efforts to restore trust in the market it oversees could bankrupt some firms by requiring brokerages to keep $100 billion or more in extra collateral to cover trading shortfalls. More on Roll Call here.
