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The rule adopted Monday also ends the practice of firms borrowing from their customers for what are essentially loans to the firms. It also ends those kinds of financing transactions, known as repurchase agreements, between affiliates of the same firm. Firms can continue to invest customer money in U.S. Treasury securities, municipal bonds and certificates of deposit. The rule will take effect in about 60 days, and firms will have roughly six months to comply. MF Global was believed to have raised much of the money for its investments in European debt with repurchase agreements with other financial firms. But regulators say MF Global may have borrowed from customer accounts to fund more short-term operations, such as covering demands for collateral.
[Associated
Press;
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