CFTC to Adopt Client-Funds Rule

Futures brokers say the rule would tie up capital and lead to higher costs for customers.

The top U.S. derivatives regulator will vote today to adopt rules to improve protections for customer funds two years after MF Global Holdings Inc. collapsed amid claims the brokerage illegally financed investments by borrowing from client accounts.

The Commodity Futures Trading Commission (CFTC) was criticized for poor oversight of MF Global and Peregrine Financial Group Inc., whose founder last year admitted stealing more than $100 million from customers. Regulatory exams over the years failed to detect the embezzlement at Peregrine, which happened over almost 20 years.

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