U.S. derivatives regulators are proposing new rules that aim to enhance the protection of client assets at dealers and clearing firms.

In the wake of a couple of cases of derivatives dealers failing amid allegations that client money has disappeared, the U.S. Commodity Futures Trading Commission (CFTC) is proposing new rules, and amendments to existing rules, to strengthen the safeguards surrounding the holding of client money, securities, and other property, with futures commission merchants (FCMs) and derivatives clearing organizations (DCOs).

Among other things, the proposals endeavour to improve the protection of customers and customer funds by: revising the rules around firms’ reserve requirements; requiring firms to maintain written policies and procedures governing the maintenance of excess funds in customer segregated accounts; enhanced reporting to regulators; allowing regulators direct electronic access to accounts holding customer funds; requiring firms to adopt policies on the supervision and risk management of customer funds; boosting disclosures addressing firm specific risks; and, enhancing the standards for the self-regulatory organizations’ examinations.

The CFTC says that the proposals are the result of its efforts to co-ordinate and consult with the futures industry on enhancing customer protections, including two public roundtables. They also expand upon previous CFTC actions to enhance customer protections.

The proposals are open for public comment for 60 days.