Nov. 3 (Bloomberg) -- The U.S. Commodity Futures Trading Commission, in dealing with MF Global Holdings Inc.’s bankruptcy, will aim “to ensure that customers maximize their recovery of funds and to discover the reason for the shortfall in segregated customer money,” CFTC Chairman Gary Gensler said in remarks prepared for a Senate hearing today.
“The most troubling aspect about the MF Global situation is the shortfall of customer money at the firm,” Gensler said in his testimony. “Segregation of customer funds is the core foundation of customer protection in the commodity futures and swaps markets. Segregation must be maintained at all times. That means at every moment of every day.”
The CFTC and the Securities and Exchange Commission determined this week that a Securities Investor Protection Corporation-led bankruptcy proceeding “would be the safest and most prudent course of action to protect customers of this failing financial institution,” Gensler said.
MF Global Holdings filed for bankruptcy protection on Oct. 31 after making bets on European sovereign debt. The filing came after efforts to find a buyer collapsed amid questions over the firm’s books.
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