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CFTC orders audit of all futures commission merchants (FCMs)

14 November 2011  •  Source: Steve Shaw, Editor, FX-MM

The CFTC has ordered an audit of all registered Futures Commission Merchants (“FCMs”) to ensure that customer money is protected in the wake of the collapse of MF Global. The Commission itself will conduct audits of the nation’s largest firms, while individual exchanges like the CME Group will examine smaller firms.

By ordering the audit, the Commission is seeking proof that futures trading firms are properly segregating consumer funds from their own accounts. Roughly $600 million has been reported missing from MF Global customer accounts, even though the FCM was audited by the CME group in January and passed a “spot audit” at the end of October.

The CFTC has also announced that it has launched an investigation into the brokerage collapse. Commissioner Jill Sommers has been designated as the senior Commissioner in matters relating to MF Global. “Segregation of customer funds is at the core of customer protection in the commodity futures and options markets and must be maintained at all times,” said Sommers. “I have complete confidence in the dedicated men and women in Enforcement to carry out the necessary investigation to get to the bottom of what happened at MFGI. Aside from the investigation, we will do everything in our power to ensure public confidence in the markets by directing a review of clearing FCMs to determine that segregated funds are being properly maintained in accordance with the CEA and Commission regulations.”