The Commodity Futures Trading Commission is proposing to amend its Bankruptcy Rules to permit the trustee for a bankrupt futures commission merchant to continue to operate the business of the commodity broker in the ordinary course for a limited period of time.
Currently, CFTC Rule 190.4 restricts the activities the trustee in bankruptcy may undertake on behalf of the commodity broker to (i) offsetting open commodity contracts, (ii) transferring delivery notices on open commodity contracts, and (iii) covering inventory or commodity contracts of the broker that cannot be immediately liquidated.
The proposed amendment is intended to address situations in which a commodity broker has filed for bankruptcy, possibly in consideration of an imminent sale of the commodity broker to a third party, but retains sufficient operating capital to enable the trustee to maintain ordinary course operations. In these circumstances, customers of the commodity broker would be permitted to continue managing their accounts during the period between the appointment of a trustee and the transfer of the customer positions from the bankrupt firm to another futures commission merchant.
The proposed amendment can be found here.