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Confirmations: Made in China

Gary DeWaal, group general counsel at Newedge, noted that Peregrine Financial Group (PFG) was able to dodge regulatory audit checks of its customer segregated funds for more than 20 years. DeWaal says that simply wouldn’t happen if the US adopted the system used in China’s futures markets called  the China Futures Margin Monitoring Center Co. Ltd. (CFMMC). In November 2012, the National Futures Association and CME Group did just that, hiring AlphaMetrix to take on the job of confirming the money FCMs say they have in their segregated accounts, with money that is held at the bank.

In this video, a simple animation and interview with DeWaal help explain the CFMMC model.

Confirmation Resources

  • Gary DeWaal on MarketsWiki (link)
  • China Futures Margin Monitoring Center Co. Ltd. (CFMMC) on MarketsWiki (link)
  • China System for Protecting Client Cash May Help U.S., NFA Says – Bloomberg (link)
  • NFA and CME Group Select AlphaMetrix to Provide Data Aggregation Services (link)

 

About the series: In the aftermath of the MF Global collapse, fraud at Peregrine Financial Group and high profile high-frequency trading shocks, John Lothian News asks – how do you restore customer confidence and bring traders back?

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