In the wake of a couple of recent high-profile firm failures, the U.S. futures industry has commissioned a study of a possible insurance regime for the industry.
The CME Group, the Futures Industry Association, the Institute for Financial Markets, and the National Futures Association Friday announced that they have jointly commissioned a study of the costs and benefits of adopting an insurance scheme for the U.S. futures industry.
The study, which is due to be completed in the spring, will examine various models for providing insurance in the futures industry and assess a range of variables for each model. The groups sponsoring the study say that they expect it to address a lack of detailed information on the potential costs and benefits associated with various insurance alternatives.
The industry study follows on a variety of other efforts to enhance customer protections and address the concerns raised by the collapse of MF Global and Peregrine Financial Group, they note.
“New rules and systems have been put in place to provide customers with more information about the status of their funds and the financial condition of their futures commission merchants. In addition, the industry’s self-regulatory organizations are now putting in place systems to receive daily confirmations from all depositories holding customer segregated funds, and implementing new rules that will strengthen internal controls and hold senior executives accountable for authorizing the movement of customer funds and preventing any misuse,” they say.
“This study will help to inform policy makers and the public by providing a thorough analysis of various insurance programs,” said FIA president and CEO, Walt Lukken.
“As an independent educational foundation, the IFM strongly believes that this study will provide an important contribution to the public policy dialogue on customer protections in the futures industry,” added IFM chairman, Peter Borish.