Och-Ziff Pushes For Tougher Swaps Collateral Rule

Jan 4 2012 | 11:10am ET

Hedge funds aren't used to pushing for tighter regulation. But that's exactly what Och-Ziff Capital Management is doing as the Commodity Futures Trading Commission considers new collateral rules for swaps.

The New York-based hedge fund giant wants the CFTC to add additional protections for brokerage customers to the rule, which is required by the Dodd-Frank financial regulation reform act and could be adopted on Jan. 11.

According to Och-Ziff, the CFTC rule as written doesn't adequately protect clients when brokers fail to keep adequate records. The hedge fund asked the CFTC to allow swap buyers to have their collateral completely segregated from a broker's commingled funds.

The CFTC's five commissioners are likely to throw Och-Ziff and others, such as Fidelity Investments and State Street Corp., a sop, raising the possibility that future measures could give further protections, Bloomberg News reports.

The issue before the CFTC gained greater urgency—and, in the eyes of Och-Ziff and its allies, a need for more teeth—in the wake of the collapse of MF Global last year. Some $1.2 billion in client funds were found to missing when the broker filed for bankruptcy.


In Depth

GSAM’s Papagiannis on Liquid Alternatives

May 25 2016 | 5:07pm ET

The popularity of liquid alternatives strategies has blossomed in recent years,...

Lifestyle

From Modern Trader: Stephen Curry is a Black Swan

May 18 2016 | 7:43pm ET

What do the rise of the Internet, the sinking of the Titanic, 9/11, and Stephen...

Guest Contributor

LendingClub and the Question of Internal Hedge Funds

May 19 2016 | 8:42pm ET

Peer-to-peer lending platform LendingClub Corp. has been in the news since the firm...