CMC Markets said on Monday that it would implement a fully segregated client money model, including client margins in Australia and New Zealand.
Louis Cooper, head of CMC Mark Australia and New Zealand, stressed that the company has always kept client money to the highest standards and follows client money rules. He said the company has been working toward that model for several months to bring it in line with practices of its parent company in the United Kingdom.
Under the model, client money, including client margins, would not be used to meet trading obligation of other clients. It would also not be used to execute any of CMC Markets' hedging activity since CMC Markets uses it own funds to finance hedging activities.
Mr Cooper pointed out that CFD funds held by CMC Markets are in a separate trust account with a major Australian bank and are established, maintained and operated following Australian Client Money Rules.
Mr Cooper stressed the adaption of the model is not linked to the MF Global bankruptcy problem which showed there was missing client money on top of losses suffered by MF Global due to its large exposure to European sovereign debt.
Following the bankruptcy filing by MF Global, its founder, former New Jersey Governor Jon Corzine resigned from the securities firm on Friday.
On the same day, Gary Gensler, chairman of the Commodity Futures Trading Commission - which had oversight over MF Global - backed out from being part of the investigation of MF Global because of his long ties with Mr Corzine.
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