July 6, 2009 

Mr. David A. Stawick 

Secretary to the Commission 

C.F.T.C. 

OFFICE OF THE SECRETARIAT 

2009 JUL 1 Rr\10 09 

Commodities Futures Trading Commission 

Three Lafayette Center 

1155 21st Street, N .W. 

Washington D.C. 20581 

secretary@cftc.gov 

Received CFTC 

Records Section 

v?loz/2C¥J7 

COMMENT 

Re: Revised Adjusted Net Capital Requirements for Futures Commission Merchants and 

Introducing Brokers, 74 Fed.Reg. 21290 (May 7, 2009) 

Dear Mr. Stawick: 

MF Global lnc.

1 ("MF Global") respectfully submits these comments regarding the Commodity Futures 

Trading Commission's ("Commission's") proposed amendments to its minimum net capital requirements for 

futures commission merchant ("FCMs") and introducing brokers ("IBs") (17 CFR § 1.17). Given the financial 

market activity of the last year, MF Global recognizes the importance of the Commission's review of existing 

capital requirements and, as set forth below, we support many of the Commission's proposals and offer our 

comments with respect to others. 

Required Minimum Dollar Amount 

The Commission is proposing to increase the required minimum dollar amount of the minimum adjusted net 

capital, as defined, ("ANC") that an FCM must maintain from $250,000 to $1,000,000, and that an 18 must 

maintain from $30,000 to $45,000. We understand that the high growth in exchange traded futures trading 

activity has significantly increased the amount of customer funds held by FCMs. We also do not think that 

this level of increase for either an FCM or IB would be prohibitive from a business perspective so as to cause 

an operating issue for an existing company or deter new entrants into the market. Moreover, the IB 

requirement would be in line with that of the National Futures Association. Accordingly, we are not opposed to 

the proposal of raising an FCM's or IS's minimum ANC to $1,000,000 and $45,000, respectively. 

Cleared Customer and Non-Customer OTC Positions 

1 MF Global Inc. is a wholly owned subsidiary of MF Global Ltd. which, through its various affiliates, is a 

leading broker of exchange-listed futures and options with offices in Bermuda, New York, London, Chicago, 

Paris, Mumbai, Singapore, Sydney, Toronto, Tokyo, Hong Kong, Taipei and Dubai. We provide execution and 

clearing services for exchange-traded and over-the-counter derivative products as well as for non-derivative 

foreign exchange products and securities in the cash market. MF Global operates across a broad range of 

trading markets, including interest rates, equities, currencies, energy, metals, agricultural and other 

commodities. MF Global operates in 12 countries on more than 70 exchanges, providing access to the world's 

largest and fastest growing financial markets. 

MF Global Ltd. 

717 Fifth Avenue 

9th Floor 

New York. New York 10022 

Tel 212-589-<3200 

Fax 212-589-6215 

www.mfglobal.com 
The Commission is proposing to amend the computation of an FCM's minimum ANC requirement to 

incorporate into the calculation customer and noncustomer positions in over-the-counter derivative 

instruments that are submitted for clearing by the FCM to derivatives clearing organizations or other clearing 

organizations. We see no reason to exclude cleared products from this calculation and including such 

positions will provide consistency and transparency. 

Cleared FCM Proprietary OTC Positions 

Similarly, the Commission proposes to amend the regulations to requ.ire that FCM proprietary cleared OTC 

derivative positions be subject to capital deductions in a manner that is consistent with the capital deductions 

required by the Commission's regulations for FCM proprietary positions in exchange-traded futures contracts 

and options contracts. For the same reasons, we agree that such cleared products should be included in the 

calculation, similar to other trading activity. 

Capital Computation for Customer and Non-Customer Position 

The Commission proposes to amend the FCM capital computation to increase the applicable percentage of 

the total margin-based requirement for futures, options and cleared OTC derivative positions in customer 

accounts from eight percent to ten percent and in non-customer accounts from four percent to ten percent. 

Here again we agree that customer and non-customer positions may be treated in the same manner. We do 

not agree, however, that the applicable percentage for both should be ten percent. Rather, if the Commission 

believes that any change is necessary, we strongly urge that the Commission retain the customer percentage 

at eight percent- a level that has proved adequate- and increase the non-customer percentage to the same 

level. 

To be sure, sensitive market conditions and high volatility in some sectors could cause an FCM to have a 

increased exposure. We believe, however, that the current risk based capital requirements have been highly 

effective in the past, specifically during the recent economic events which can be said to have been the 

ultimate stress test. The cornerstone of customer financial protection in the futures industry has always been 

the segregation of customer funds and to our knowledge there have been no customer losses due to any 

FCM collapse, including in this recent unprecedented environment. In addition, we are unaware of any 

historical analysis that supports such an increase. 

Against this record of success is the financial burden that the Commission's proposed increase from 8% to 

10% will impose. Having the ability to meet the higher requirement (which the Commission notes appears to 

be the case for most FCMs) does not mean that there will not be substantial costs. A major reduction in a 

firm's excess capital may compel a firm to seek outside funding which in the current economic environment 

may prove to be difficult at best and a financial and strategic burden. More directly, as an FCM's excess 

capital decreases, customers depart, furthering industry consolidation and making more pronounced the 

concentration of segregated and secured customer funds in a decreasing number of FCMs- a phenomenon 

about which the Commission is rightly concerned. And, less competition reduces customer choice and drives 

up cost, ultimately to the disadvantage of customers. 
Meeting both Broker-Dealer and FCM Capital Requirements 

Lastly, the Commission solicits public comments on the advisability of increasing the ANC requirement for 

FCMs that are also securities brokers and dealers by the amount of net capital required by the Securities and 

Exchange Commission ("SEC") Rule 15c3-1(a). We believe that the current method, which compares 

requirements under the Commission and SEC's rules and takes the greater amount, is sufficient. For the 

reasons just mentioned, we do not believe that the need for such a combined burden has been demonstrated 

at this time and so we respectfully but strongly urge the Commission not to adopt it. 

MF Global understands that the market experiences of the past year necessitate that the Commission 

reexamine all financial requirements to assure the protection of market participants and enhance risk 

management practices and the financial integrity of futures markets. We are very grateful for the opportunity 

to comment of these proposals and we are pleased to support many of them. If any member of the 

Commission or its staff has any questions, please contact Laurie Ferber our General Counsel. 

Sincerely, 

Bernard W. Dan, CEO