Story originally appeared in the November 23, 2011 edition of the Chicago Tribune.
CME Group disputes the $1.2 billion shortfall in customer-segregated accounts announced Monday by the trustee, stating it is confident that those reports are incorrect
By Alejandra Cancino, Chicago Tribune reporter
In a move to increase payouts to former customers of MF Global Inc., Chicago-based CME Group Inc. said Tuesday that it increased its financial guarantee to $550 million.
Under the new guarantee, the trustee liquidating the broker-dealer firm would be able to distribute to customers up to 75 percent of their cash and assets. They are now scheduled to receive 60 percent under CME’s previous guarantee.
CME Group also disputed Tuesday the $1.2 billion shortfall in customer-segregated accounts announced Monday by the trustee, stating it is confident that those reports are incorrect. Initial reports said the shortfall was $600 million.
“The protection of our customers and the integrity of all futures markets continue to be our two chief concerns, and today we are taking aggressive action to further assist customers and restore confidence to the marketplace,” Craig Donohue, CME Group’s chief executive, said in a statement.
John Roe, co-founder of the Commodity Customer Coalition, said CME Group should have offered a financial guarantee from day one to facilitate trading and the transfer of customer accounts with open positions to other firms, without lockups and disruption to the market.
“Finally, the CME Group is stepping up to its responsibility in the process,” Roe said. “We feel CME Group dropped the ball from day one.”
Based in Chicago, the coalition says it represents more than 7,000 MF Global customers whose money was temporarily frozen when the firm’s parent company filed for protection from creditors on Oct. 31.
CME Group, which owns the Chicago Mercantile Exchange and the Chicago Board of Trade, said in a statement that the increase from $250 million to $550 million allows trustee James Giddens, to make larger cash distributions to customers before sorting through “considerable data and claims in order to complete the MF Global liquidation and make distributions to creditors.”
If approved, the guarantee would serve as a cushion in case the trustee distributes more money than allowed under the law. The trustee’s office said in a statement that it appreciates the offer and that the trustee continues to get 60 percent of cash and assets returned to customers as quickly as possible.