"Law and Order"

Speech of Commissioner Bart Chilton at the Futures Industry Association Customer Protection Roundtable, Boca Raton, FL

March 13, 2013

Thanks for the invitation to be here today to talk about a subject that all of us in the futures world ought to have clearly on our radar. The collapse of MF Global and Peregrine were bitter pills to swallow for customers and showed us that customer protections at futures commission merchants (FCMs) needed vast improvement.

Some of those improvements have been made. Others are in the works. One of them that’s at the top of my wish list is the establishment of an insurance fund for futures customers. It makes not a lick of sense that securities customers have such insurance, as do all of us who have a bank account, but futures customers are left holding an empty bag when an FCM collapses. Yes, it will take an act of Congress to establish such a fund, but it’s being talked about on the Hill. I’ve urged that it be part of CFTC’s reauthorization that comes up later this year. It’s the kind of Law and Order futures customers need.

And, let me say that given the crisis of confidence in the financial sector, I think many of you should embrace this idea. There is an impression in the countryside that there is collective bad behavior going on and that financial firms are unworthy of trust. A derivatives insurance fund is a good example of where there should, in my view, be a sense of obligation to customers. And, it should be more than a "feel good" branding opportunity for firms. There should be a business imperative to act, to do what is right and increase consumer confidence. Just think when you go to a bank, they all have a gold "Insured by the FDIC" sticker on the door. A derivatives insurance fund should, like the FDIC and SIPC, be a value measurement of a safe and solid functioning firm and industry.

So, I'm pleased to discuss, debate and debunk some of the nutty arguments out there. And I hope to work with you to see how we can make this a reality. I honestly believe it will be good for firms, good for the industry, and good for consumers.

Thank you.

Last Updated: March 13, 2013