By Dan Collins:

“Reuters is reporting that the Commodity Futures Trading Commission (CFTC) is digging in its heals regarding a rule proposal that would force futures commission merchants (FCMs) to top up customer margin with their own funds when customers face a margin call.

The rule proposal, which is actually a reinterpretation of an existing rule, caused sharp reaction from the industry during Congressional hearings on the reauthorization of the CFTC last week.

The story cites an International Swaps and Derivatives Association (ISDA) analysis that estimates the CFTC reinterpretation of margin rules “would cost the futures industry as much as $120 billion and the swaps industry as much as $558 billion.”

Reuters reported that CFTC Director Division of Clearing Ananda Radhakrishnan says it is merely a clarification what the law already says: funds from one customer must not be used to pay for the position or deficit of another customer…”

“…Those most affected by the rule interpretation would be farmers and ranchers and the FCMs that service them. These are the folks who were the largest victims of the MF Global and Peregrine Financial Group failures and they are being punished further by the regulator who failed to protect them in the first place. This doesn’t seem fair.”

>>Read the Full Article at Dan Collins Report