CFTC Could Soon Approve Rule that Concerns Some Agribusiness Companies

There are reports that rules designed to make the futures market safer could be recommended for Commodity Futures Trading Commission approval as early as this week. A vote could come as soon as next week. The package of rules is expected to include a provision that could require futures brokers to set aside about twice as much collateral as firms are currently required to hold. The rules are also expected to give regulators electronic oversight of customer accounts and a new requirement that would require CEOs to sign off on any significant transfer of customer money. Many of the rules CFTC is expected to consider have broad support from the industry. In fact - some have been implemented by the industry's self-regulatory body. But that rule that would require brokers to put aside extra funds to ensure money isn't borrowed from one customer to back another client's trade isn't as popular. Agribusiness companies say the proposal is too expensive - especially for nonfinancial companies that don't have a lot of cash on hand. Iowa Farm Bureau Director of Research David Miller says that proposal doesn't address any of the customer protection issues that were the cause of any problems of the past few decades. The CFTC is expected to give firms up to a year to comply with the rule - but isn't expected to alter the overall requirement that firms place more money into a separate account.

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