Investors hail partial victory on CFTC rules The US Commodity Futures Trading Commission has approved a rule to protect swap traders" collateral, a measure mandated by Congress in 2010 that gained urgency following the collapse of brokerage MF Global and the subsequent vanishing of up to $1.2bn in customer cash. The rule, approved on Wednesday by a 4-1 vote, limits the ability of clearing houses to tap customer funds to cover a broker default, a partial victory for investors who had urged the CFTC to adopt stringent rules following MF Global's bankruptcy and accusations that the firm misused clients" funds. But the rule allows brokerages to pool together customers" cash, and it does not allow investors the option of segregating their funds at a third-party firm to prevent brokers from pooling their assets together - a disappointment to some investors who pushed for stronger protections. It also does not apply to futures accounts. MF Global was a "slap in the face" to regulators, said Bart Chilton, one of the CFTC's three Democratic commissioners who voted in favour of the measure. David Felsenthal, a lawyer at Clifford Chance who represents a group of pension fund investors, said: "This seems like a step in the right direction towards recognising customer protection following MF Global." Although Mr Chilton and Scott O'Malia, a Republican CFTC commissioner, both voted to support the measure, each offered separate proposals for how it should be tweaked in future. Mr O'Malia said the rule "does not address - much less solve - MF Global." The rule is "simply a first step," he added. The commissioner suggested that the agency adopt similar rules for swaps and futures customers. Mr Chilton has previously said that the agency should have similar rules governing the accounts of swaps and futures customers, and on Wednesday he added that the agency should adopt proposals that would allow customers to opt out of investments brokerages make with their funds. Chris Perkins, global head of derivatives clearing at Citigroup, cautioned against such a measure: "If there is a proliferation of segregation "options" we could have a problem during a default situation because it will be complicated to figure out who's in what waterfall," he said, alluding to an MF Global-like bankruptcy. Time is of the essence when you go through a default. Big investors such as Fidelity Investments had argued that the MF Global case showed that the collateral they post against swaps should not be pooled with other investors" collateral, as it is in futures. After Jill Sommers, a Republican commissioner who voted against the measure, aired her concerns with the rule, Mr Chilton retorted: "We shouldn't let the perfect be the enemy of the good." Gary Gensler, CFTC chairman, said the agency's staff was examining additional proposals to safeguard customer funds, including the adoption of the new swaps regime for futures investors. "By passing [the measure], the commissioners are ensuring protection of investor collateral for swaps . . . while not foreclosing the possibility of even stronger consumer protections if the industry can find such solutions while still balancing costs," said Supurna VedBrat, co-head of BlackRock's market structure and electronic trading team.