While many in Washington were packing their bags for a long weekend, Commodity Futures Trading Commission Commissioner Bart Chilton took an opportunity to lay out his agenda.

In a prepared statement issued on Friday afternoon, he suggested various action items he thinks the Commission should tackle in the months ahead.

“Our staff has worked diligently on customer protection issues [for futures investors],” he said. “We've heard from various stakeholders and talked amongst ourselves. We've listened and learned a lot. But, it is time for us to get on with it.”

Chilton laid out four proposals he says the CFTC needs to prioritize.

Mandating Direct Access to Electronic Bank Records

There are still some futures commission merchants (FCMs) that don't provide self-regulatory organizations (SROs) or the Commission with electronic access to their bank records, Chilton said, adding that there should be a “zero tolerance” policy for such firms.

“If they don't allow direct access to electronic banking records, let's immediately deny their ability to hold customer funds,” he said.

Requiring Standardized Audits

That means ensuring when front-line oversight and examinations are conducted by a self-regulatory organization that an FCM is audited by the same standards required by the Commission, he said. These standards should include, at a minimum, testing internal controls, and thorough examinations driven by the risk profile of the FCM.

Instituting Liquidity Notification Levels

Chilton suggests two alert action stages. “Liquidity Level One” would be a circumstance in which an FCM is approaching a problematic liquidity event and the firm may encounter difficulties meeting obligations. This stage should require the FCM to immediately notify the Commission and other pertinent regulatory authorities when, for example, the firm is placed on “credit watch,” or a bank or other financing entity withdraws credit facilities, or an affiliate experiences a bankruptcy.

“Liquidity Level Two” would be a circumstance in which the FCM no longer has enough liquidity to continue operations. In such a situation, the FCM would be required to transfer customer accounts to another FCM.

Chilton also suggests that the Commission should institute an "escape hatch" procedure in which a FCM that can't demonstrate its access to adequate liquidity with verifiable evidence may be required by Commission action to transfer its customer accounts to a solvent FCM.

Improving Consumer Education and Customer Disclosure

The Commission would require disclosures to existing customers and provide transparent business activity information for consumers.

“Many individuals involved with the MF Global debacle expressed concern that they didn't fully understand the activities with which the FCM was involved,” Chilton said. “As the futures industry moves toward more retail-oriented businesses, and in order to ensure more transparency and consumer-customer education, we should require FCMs to disclose the business activities in which it engages—including proprietary trading activities and the risks associated with those activities. This will provide an opportunity for consumers to make better-informed decisions about where to place (or not place) their hard-earned money.”

Separate of these initiatives, Chilton also reiterated his pitch for a “Futures Insurance Fund,” similar to the protections offered by the Securities Investor Protection Corporation for customers of failed brokerage firms and the Federal Deposit Insurance Corporation for bank deposits.

“While it is outside of the regulatory purview of the Commission, and would require a statutory change, the Commission should encourage Congress to address the lack of a futures insurance fund,” he said. “It makes no sense that such insurance protection is afforded to banking customers and those who invest in securities, yet not people that invest in futures. The funds of futures customers are every bit as significant as those of other customers.”