MF Global returns imminent as CME takes US$30 million Q4 hit
UK customers of
failed futures broker MF Global could see some of their money returned as early
as next week, while in the US, Chicago-based CME Group has revealed it took a
US$30 million hit last quarter due to MF Global’s bankruptcy and is launching a
US$100 million protection fund for customers.
special administrator for MF Global’s UK holdings, told a London court today
they may be able to begin returning client money as early as next week.
of 26 cent in the dollar will be made to clients with “agreed claims” who had
positions frozen or money lost that was supposed to be in segregated accounts.
No more funds
can currently be provided to UK clients because the Supreme Court of Britain
needs to ascertain which customers can claim protection, and MF Global’s US
bankruptcy trustee, James Giddens, is also fighting KPMG asserting around
US$740 million of the UK funds should be repatriated for American customers.
The unwinding of
client positions at MF Global has been complicated by the different liquidation
policies of futures clearing houses. In the US, the CME Group – the largest
futures exchange operator in the US and a ‘self-regulatory’ organisation for
the sector – came under fire for not releasing funds quick enough. The group
maintained it acted decisively to transfer MF Global positions and supporting
collateral to other clearing members instead of liquidating those positions.
But in Q4
results released today, CME revealed a US$30 million hit from activities
related to MF Global. Profits of US$390 million included a US$3 million
negative impact related to the broker’s bankruptcy, and operating expenses of
US$346 million included a US$27 million expense from the affair.
In a bid to
quell angry MF Global customers who are still awaiting returns, CME said it
would establish a US$100 million fund to provide protection of customer
segregated funds for US family farmers and ranchers who hedge their business in
CME futures markets.
“In light of the
recent MF Global failure, in which a clearing firm violated Commodity Futures
Trading Commission regulations and misused customer monies that should have been
kept segregated, CME Group is adding this extra security measure to protect the
country’s food producers who are using CME Group futures markets to hedge their
crops and livestock that feed the world,” the company said in a statement.
MF Global filed for
bankruptcy in New York on 31 October after counterparties reacted adversely to
the disclosure of a US$6.3 billion bet on European debt. It has also been
reported widely that regulators have determined that days before the 31 October
bankruptcy filing, MF Global may have moved more than US$100 million in client
money to its own brokerage accounts.