MF Global Won't Permanently Damage Futures Industry - FIA
March 13 2012 - 1:01PM
Dow Jones News
The head of the main lobby group for the futures industry
predicted Tuesday that the business will overcome the reputational
damage suffered by the collapse of MF Global Holdings (MFGLQ), one
of its main players.
Efforts by futures firms and exchanges to develop
industry-backed fixes, for some of the structural shortcomings
revealed by MF Global's downfall, will help reassure users about
the markets, according to John Damgard, who is stepping down as
president of the Futures Industry Association.
"This is a black eye, not a permanent problem," said Damgard at
the FIA annual conference in Florida. The site featured life-size
cardboard cutouts of Damgard, who is retiring after 30 years atop
the organization.
An unresolved shortfall in customer funds held by MF Global,
estimated at $1.6 billion, called into question the way client
assets are safeguarded by futures firms. The industry has long
regarded such protections as sacred.
Addressing the deficiency has been complicated by the fact that
nearly five months after the bankruptcy, regulators and
investigators have yet to explain what happened during MF Global's
final days.
Committees formed by the FIA and others have considered a range
of changes in the ways the futures market looks after customers,
including more regular audits of brokers' books and the potential
for an insurance-type fund to protect client assets.
"Firms are stepping up and saying they're going to solve this,
and they're doing it for business reasons," Damgard said.
The potential for customers caught up in the MF Global collapse
to get back 97 or 98 cents on every dollar they had with the firm
seems like "a pretty good deal," Damgard said. So far, customers
have received 72% of their assets back, thanks to a series of
financial guarantees proffered by Chicago-based exchange group CME
Group Inc. (CME).
Reclaiming their stuck funds and understanding what drove the
problems at MF Global will help confidence in the futures market
rebound, according to Damgard.
-By Jacob Bunge, Dow Jones Newswires; 312 750 4117;
jacob.bunge@dowjones.com
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