In October 2011, as the futures broker MF Global teetered on the brink of collapse, it dipped into client accounts in an effort to avert bankruptcy.
But the action failed to save the broker, and its implosion left thousands of clients short a total of $1.6 billion.
Two years after MF Global’s bankruptcy, regulators have sought to restore confidence in the industry, tightening rules that force brokerage firms to better safeguard client money.
The Commodity Futures Trading Commission voted 3 to 1 on Wednesday to finish rules proposed a year ago to protect customers, including measures to close loopholes, reinforce internal risk controls and force brokers to provide more information to clients.
“This new information is critical in today’s world of high-frequency trading,” said Gary S. Gensler, chairman of the commission. “Thus, with these reforms, the commission will get additional tools to oversee the markets’ largest day traders and high-frequency traders.”
The new rules are part of a wider shift in policy to better regulate the futures industry after years of lighter-touch policy.
“It’s really pretty clear that we are supposed to protect customer funds all the time,” said Bart Chilton, a member of the commission. “In fairness, we haven’t done as well, if you look at the history, as I think we should have. This rule gets to where we need to be.”
When MF Global declared bankruptcy on Oct. 31, 2011, it sent ripples through the futures industry and prompted several federal investigations and congressional hearings. Less than a year later, another futures brokerage firm, the Peregrine Financial Group, buckled after funneling $215 million out of client accounts.
With the new rules, the commission aims to shine a light on how brokers maintain their clients’ accounts while also outlining limitations on when money can be moved around.
Brokers will be subject to tougher auditing standards and will be required to provide daily reports that include details of each separate client account. Those reports will be filed electronically. Mr. Gensler said that step was “the right place to be in the 21st century.”
The commission also voted to close a loophole that allowed brokerage firms to use money from client accounts that traded overseas under an exemption called the “alternative calculation.”
The most debated of the new rules will change how brokers keep collateral and make margin calls to ensure limits on defaults. Brokers, who are required to provide a financial buffer in client accounts, will also be forced to make clients pay several days earlier than they do now.
Some brokers have said these changes could put them out of business because it requires them to hold more capital in client accounts, while agricultural groups have raised concerns that some farmers would be forced out of the market if they had to make payments on their trades sooner.
Scott D. O’Malia, another member of the commission, was the dissenting vote.
“Instead 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,” he said in a statement after the meeting.
During the meeting, Mr. O’Malia proposed an amendment to the new payment timeline requirements, hoping to leave open the date for a final decision. The changes will be phased in over five years.
Mr. Gensler, the commissioners and members of C.F.T.C. oversight teams spent more than an hour debating the effect of the new requirements. The commission rejected Mr. O’Malia’s amendment, 3 to 1.
With the second anniversary of MF Global’s bankruptcy on Thursday, clients whose money seemed lost are closer to getting it back. James W. Giddens, the trustee who has been assigned the task of finding the money and returning it to customers, has recovered nearly all the funds.