One of the most frequent complaints about regulation in the U.S. is that it can take a lifetime to get anything accomplished. This isn’t an unfair criticism. After all, it’s 2013 and our legislative response to 2008 (however misguided it may have been) is STILL not fully implemented. However, at the risk of getting our jaded cynic membership card taken away, we have to provide recognition to the NFA for its swift (even if belated) implementation of enhanced reporting requirements for FCMs in the wake of the PFGBest fraud. In a member notice published today, the NFA reported (emphasis ours):

NFA recently amended NFA Financial Requirements Section 4 to require FCMs that hold customer segregated funds under CFTC Regulation 1.20, customer secured amount funds under CFTC Regulation 30.7 or cleared swaps customer collateral under CFTC Regulation 22.2 (collectively “customer segregated funds”) to instruct the depositories holding these funds to report the balances in these accounts on a daily basis to a third party designated by NFA. The amendments also provide that a depository must comply with this request in order to be an acceptable depository for customer segregated funds. CME Group, Inc. (CME) has adopted similar requirements for its FCM clearing members. […]

Although the Financial Requirements Section 4 applies to all depositories holding customer segregated funds, NFA is implementing the process in phases. The first phase, which requires bank and trust company depositories to report end of day cash and securities balances, is effective February 15, 2013.

The PFGBest crisis never should have happened to begin with, but thanks to the expedited efforts of people across the futures industry, we now see regulations in place that should make it far more difficult for such an event to pass again. This is progress. And it’s just the beginning.