UPDATE 1-U.S. approves new rules to protect futures customers
* "Corzine rule" requires top execs to approve withdrawals
* Brokers must notify regulators before large withdrawals
* Must also submit daily segregated fund calculations
* Rules come as a response to MF Global collapse
* Also come same day PFGBest founder arrested (Adds rule details, background throughout)
By Sarah N. Lynch
WASHINGTON, July 13 (Reuters) - U.S. futures regulators approved new regulations on Friday to shore up protection of brokerage customer funds following last year's collapse of MF Global.
The Commodity Futures Trading Commission approved the rule on the same day that Russell Wasendorf Sr., the founder of another failed brokerage firm, PFGBest, was arrested on fraud charges in connection with allegedly misappropriating customer money.
Friday's new final rules address the kinds of problems that have been seen at both MF Global and PFGBest, where customer money was not properly segregated.
In the case of MF Global, an estimated $1.6 billion in customer money went missing.
MF Global, which was led by former New Jersey Governor and U.S. Senator Jon Corzine, collapsed in October after investors and customers became rattled over its multibillion-dollar bet on European sovereign debt and downgrades by credit rating agencies, resulting in a liquidity crunch.
A measure known as the "Corzine rule" would require top executives at futures brokers to sign off on major withdrawals from customer accounts. A major withdrawal would be considered anything more than 25 percent of a customer's excess funds.
It was developed in response to Corzine saying he had no direct knowledge of money transfers made by the firm.
Other new rules approved on Friday include requirements for future brokers to have written policies governing the maintenance of excess funds.
Those brokerages would also have to notify regulators before withdrawing 25 percent or more of the excess customer funds, and they would also have to file daily reports on segregation computations, among other new requirements.
Friday's regulations were approved at the request of the National Futures Association, the self-regulatory futures group.
The NFA has come under scrutiny this week, after the CFTC filed a civil complaint against Iowa-based PFGBest and Wasendorf following the discovery of more than $200 million in missing customer money. The NFA was the primary day-to-day regulator for PFGBest.
The massive fraud at PFGBest was uncovered in a signed note that Wasendorf left when he tried to commit suicide on Monday morning in his car in the parking lot of PFGBest's headquarters. The firm filed for bankruptcy on Tuesday. (Reporting By Sarah N. Lynch and Alexandra Alper; Editing by Tim Dobbyn)
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