"The CFTC had ordered MF Global to overhaul its internal control structure with the assistance of an outside consultant," said Baxter. "New York Fed staff decided to wait for the CFTC's assessment before taking a view on the firm's suitability as a primary dealer."
In January of 2011, a New York Fed official circulated a memo that concluded MF Global "demonstrated a clear ability" to meet primary dealer standards. The New York Fed announced that it had designated MF Global as a primary dealer on February 2.
Baxter also said that in MF Global's final days the New York Fed took a series of actions to limit its exposure to the firm, including margin calls.
He said the New York Fed had not sustained any losses as a result of MF Global's collapse on October 31.
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