A Republican regulator on Wednesday called for new measures to restore public confidence in the futures industry after $600 million went missing from MF Global, the bankrupt brokerage firm.
Scott D. O’Malia, a Republican member of the Commodity Futures Trading Commission, said on Wednesday that the agency should revisit certain regulations, enact new transparency measures and keep a closer eye on futures firms to ensure that customer funds are kept separate from company money.
MF Global customers still cannot access much of their money, highlighting the need for a quick regulatory response, Mr. O’Malia said.
“The inability of MF Global customers as a whole to access their funds has affected trading in futures markets, and has shaken public confidence in our customer protection regime,” he said in a statement. “To renew public confidence in segregation and to assure the public that MF Global is an isolated incident, the commission should immediately take action.”
Last week, the commission ordered an audit of every American futures trading firm to verify that customer money was protected. Now Mr. O’Malia wants to go further, saying the agency should create a “random spot check.” If a firm fails to prove that its customer cash is safe, then regulators might sanction the firm, Mr. O’Malia said.
He also said the commission should review its rules that set minimum capital levels for brokerage firms that belong to futures clearinghouses. Earlier this year, MF Global had lobbied the agency to lower the required amount of capital a firm had to hold to become a so-called clearing member.
“Many have said that the failure of MF Global was not systemic and that we are lucky,” Mr. O’Malia said.
“I don’t view it in the same light,” he added. “I am certain that the thousands of individuals who have lost money or can’t get access to their rightful property don’t share that sentiment either.”