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Protecting Futures Customers

"Déjà Vu All Over Again?

In the late 1970s, a wave of brokerage firm failures rocked the futures industry, leading to a serious examination of the way business was conducted and prompting a number of proposals for ways to better protect customers. But as time passed, customers were repaid, and no additional failures occurred, the sense of urgency was lost. Interest in making industry-wide changes faded away, and the underlying problems were left unaddressed.

Fast forward to 2014. More than two years after the industry suffered two back-to-back brokerage firm failures - one of them the eighth-largest bankruptcy of all time - nothing much has changed, and the sense of urgency has largely disappeared except among those customers still waiting to recover their missing funds. There are numerous proposals on the table, several of which have been described in these posts, and like all proposals each has its own strengths and weaknesses. It remains to be seen whether the opportunity to fix this issue slips away once again, and the problem is allowed to resurface at some point in the future.

Issued by Paul E. Peterson
The Clearing Corporation Charitable Foundation Clinical Professor of Derivatives Trading
Department of Agricultural and Consumer Economics
 University of Illinois"


Discussion of some of the proposals, but one doesn't get the feeling that there is any sense of urgency.

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