However, if you want to see how MF Global has been regulated (or not) by various agencies, then you may want to read about how the Federal authorities are making inquiries into the CME (Chicago Mercantile Exchange), which served as MF Global's primary regulator. Then you have another regulator, CFTC (Commodity Futures Trading Commission), looking into CME's conduct. How convoluted all this regulation is becoming! Mixed in with real regulation is "self-regulation." Is there such a creature as a regulator regulating "self-regulation?
MF Global Inquiry Turns to Its Primary Regulator
By Ben Protess and Azam Ahmed - DealBook
Federal authorities investigating the collapse of MF Global have expanded their inquiry to include the actions of the CME Group, the operator of the main exchange where the commodities brokerage firm conducted business, according to people briefed on the matter.
CME, which also served as MF Global’s primary regulator, has come under heavy criticism after $1.2 billion in customer money disappeared from MF Global. The Commodity Futures Trading Commission, the government agency leading the case, is scrutinizing CME’s conduct in the days before MF Global filed for bankruptcy on Oct. 31.
In particular, the commission is reviewing whether CME’s efforts to verify the safety of customer money were sufficient, the people said.
CME, for its part, has said that MF Global may have intentionally produced inaccurate documents related to customer accounts.
As the owner of the Chicago Mercantile Exchange, the Chicago Board of Trade and the New York Mercantile Exchange, the CME Group is a major force in commodities and futures. It is the dominant United States exchange operator for billions of dollars in trades, affecting food prices and Wall Street profits. A censure of any kind would be a powerful, if merely symbolic, critique of the behemoth.
If the federal regulator finds that CME did not meet the standards of so-called self-regulatory organizations, it could fine or sanction the exchange. The commission could also revoke CME’s status as a self-regulator, though that is unlikely. Experts say it is rare for the government to hand down any manner of sanction against a self-regulatory body.
CME has not been accused of any wrongdoing, and the review of its actions may not produce any findings.
“Given the issues involved, we welcome and expect the C.F.T.C.’s investigation as a natural part of this process,” a spokeswoman for the CME Group said in a statement. “We are confident the C.F.T.C.’s review will determine we did everything right within our regulatory power. The system did not fail; the firm broke the law by misusing customer funds.”
The collapse of MF Global — and the ensuing hunt for the missing money — has rippled through Wall Street, Washington and the Farm Belt. Creditors are fighting for their cut in bankruptcy court, lawmakers are holding Congressional hearings, and farmers and other clients are waiting for their money to reappear.
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