The collapse of commodity broker MF Global has spurred Senate Agriculture Committee Chairwoman Debbie Stabenow to seek recommendations from participants in the futures and derivatives markets.
In a recent letter to Senator Stabenow, NMPF shared the dairy industry’s distress that cash accounts of MF Global’s commodity customers were improperly used by the broker, and that only 72% of those accounts have been returned so far. Federal law gives commodity futures and options customers first claim on what they are owed from the broker’s bankruptcy, regardless of the broker’s failure to keep funds properly segregated. NMPF asked for the Senator’s support for that position, which has been taken up by the Commodity Futures Trading Commission.
Finally, NMPF urged greater accountability by commodity brokers in the future, offered its support for CFTC’s new rules to tighten up protections for commodity customers’ cash accounts, and sought tougher enforcement and more severe penalties under those rules. All these positions are aimed at allowing dairy farmers – and their customers – to manage their risks without having to worry about the honesty of the middleman. If you have questions about these issues, please call Roger Cryan or Jonathon Glueck in the NMPF offices.