Citigroup Inc. said it will show trading clients how the lender is managing their funds as regulators probe missing customer cash at MF Global Holdings Ltd. and Peregrine Financial Group Inc.
Customers using New York-based Citigroup to buy and sell futures and over-the-counter derivative products can now see how much client funds the bank holds, Christopher Perkins, global head of OTC clearing, said today in a phone interview. Clients can use a Citigroup website to monitor the composition of the funds and where they're being held, he said.
Citigroup is responding to allegations surrounding MF Global and Peregrine, which filed for bankruptcy after shortfalls in client accounts. This has raised scrutiny of how regulators ensure that banks and brokerages separate and protect customer cash when trading in futures.
"It's almost impossible for regulators to come up with rules that prevent malfeasance and fraud," Perkins said. "You can come up with the best rules in the world but if people violate them, you've still got a problem. The best way to mitigate these kinds of threats to client money would be through enhanced transparency."
Customers of Citigroup's futures-trading business were unable to see this information until now, Perkins said. Citigroup, run by Chief Executive Officer Vikram Pandit, had about $9 billion in segregated customer assets at the end of April, the sixth-largest among U.S. futures brokerages, according to the U.S. Commodity Futures Trading Commission.