U.S. Commodity Futures Trading Commission on Dec. 5 unanimously approved a final rule enhancing protection for customer funds held by broker-dealers and other firms trading derivatives.

After previously delaying a vote on this final rule, last week’s action by the CFTC took on increased significance in the wake of the ongoing MF Global saga, whereby one of the nation’s largest broker-dealer firms is alleged to have misused customer funds amounting to $1.2 billion.

MF Global filed for bankruptcy Oct. 31 after losing a bet on euro zone debt crisis. Federal authorities are now investigating the firm, alleging that trading rules that prohibit misuse of customer funds may have been broken.

CFTC commissioners voted five-to-zero in favor of the rule to enhance customer protection, especially regarding where derivatives clearing organizations and futures commission merchants can invest customer funds.

“I believe that this rule is critical for the safeguarding of customer money,” CFTC Chairman Gary Gensler said.

The Commodity Exchange Act in section 4d (a)(2) prescribes that customer funds can only be placed in a set list of permitted investments. From 2000 to 2005, the CFTC granted exemptions to this list, loosening the rules for the investment of customer funds. These exemptions allowed FCMs to invest customer funds in AAA-rated sovereign debt, as well as to lend customer money to another side of the firm through repurchase agreements. The rule being considered today prevents such in-house lending through repurchase agreements.

“I believe there is an inherent conflict of interest between parts of a firm doing these transactions,” Gensler added. “The rule also would limit an FCM’s ability to invest customer money in foreign sovereign debt. In addition, this rule fulfills a Dodd-Frank requirement that the CFTC remove all reliance on credit ratings from its regulations.”

Bart Chilton, one of the five CFTC voting commissioners, said protecting customer funds need to be top priority, calling this the “MF Global Rule.” There wasn’t much opposition to the rule from other commissioners. This is one of the rules that were postponed about six months ago after lobbying by broker-dealers, including Corzine, but it gained momentum after the MF Global issue.

The five biggest FCMs are Goldman Sachs & Co., Newedge USA LLC, JP Morgan Futures Inc., UBS Securities LLC and Citigroup Global Markets Inc.

The CFTC commissioners are also expected to approve a separate final rule that would ensure foreign boards of trade or exchanges that offer products to U.S. customers are registered in this country to bring them under federal oversight. Commissioners are still discussing the rule before a vote is taken.