Comment Text:
As an user of the US futures markets, with accounts at different FCMs in Chicago and Connecticut, I consider that there are 2 different problems when it comes to protecting customer funds at FCMs.
First, protecting the market user against fraud ala PFG. Here the problem is not a lack of rules but a lack of enforcement. No need to give more budget to people who were scammed for more than 10 years by photoshop and a PO box. If the CFTC and the NFA really starts to enforce existing rules and the new proposed rules made on October 23, it will be extremely hard for any FCM officer to commit fraud in the future. I will consider my funds safe if those rules are enforced.
Second, as FCM are making less and less on commissions and more and more on interests, a particular attention should be given to the type of investments FCMs are doing. Here new rules are needed. Fixed income doesn't mean risk free... And those type of investments should be made public so that the customers knows the risks. Here I am not an expert but only extremely safe investments should be made by FCMs. If it means that commissions will come back to their 10 years ago level, then be it.
When it comes to the creation of a public fund to protect futures traders, I am not sure it is the right solution. It will require Taxpayer's money or futures market users money( fees )when simple private protection available to the customer( as proposed by the CCC )should do the job, and faster. The futures markets are not like the securities or deposit accounts. A simpler smaller solution can be found.
Again, if rules against fraud are enforced as I am quite sure they will be...now, and FCMs are forbidden to make dangerous investments, then we will be fine. No need to create a monster when little improvements can do the job.
