CME Defends Current Futures Regulatory System | WSJ

    This article originally appeared in the Wall Street Journal.

    By Jamila Trindle

    WASHINGTON–CME Group Inc. (CME), operator of the world’s largest futures exchange, Wednesday defended the current regulatory system for the futures industry, which has been criticized after alleged fraud at Peregrine Financial Group Inc. left futures customers short of funds for the second time in a year.

    The current regulatory structure gives CME responsibility for overseeing most of the largest futures firms including MF Global, which filed for bankruptcy Oct. 31.

    CME Chairman Terry Duffy said that the current system is “resilient” and “adaptive.”

    “Misconduct of MFG and PFG will renew calls to eliminate the role of exchanges and clearing houses in auditing and enforcement of their members, we do not believe that a legitimate case can be made to transfer these responsibilities to a government agency,” Mr. Duffy said at a Senate Agriculture hearing.

    Some critics of the current system have argued that there should be an insurance fund for customers that would pay out in the case of fraud or missing money.

    “We have to stop expecting the regulators to do their jobs and start offering customers protections when they do not,” said John Roe, a spokesman for a group advocating for MF Global customers, the Commodity Customer Coalition.

    Mr. Duffy argued that creating an insurance fund would be cost-prohibitive.

    Futures Industry Association President Walt Lukken said that the association is looking into the possibility of an insurance fund.

    Write to Jamila Trindle at

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