Statement of Commissioner Bart Chilton on the Futures Investor and Customer Protection Act (FICPA) Proposal
August 9, 2012
Last November, in the wake of the MF Global debacle, I called for a futures insurance fund. It made no sense to me that banking customers had insurance (up to $250,000) through the Federal Deposit Insurance Corporation (FDIC) and that security customers had similar protections up to $500,000 through the SIPC Fund. The support for such a futures insurance fund, at the time, was essentially zero. Nobody said they liked it. A few folks said they didn't like it. Perhaps it would only encourage risky behavior by firms if they knew there was insurance, one Member of Congress suggested to me. That's a good point, which is why such a fund (if it were to exist) should never pay out for trading losses or losses as a result of a downturn in the economy. Some suggested, without much detail, that such a fund for futures customers would be excessively expensive. I don't agree, and ask those who lost money if they would have wanted such a fund and there will be unanimity support of such a concept.
While I kept discussing the need for the fund, hardly anyone said "boo" about it. Then in July came the collapse and apparent fraud of Peregrine. Hundreds of millions of dollars of customer money should never go “kaput.” Now, it seems that this idea for a futures insurance fund has some traction. However, in order to actually get us moving down the road to a new law that provides for such a fund, I am today, putting forth a proposal for how Congress might craft such a new law.
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