CME Group Increases Guarantee to $550M to Accelerate Return of 75 Percent
of MF Global Inc. Segregated Funds to All Customers
· CME Group confident reports of significantly larger shortfalls are incorrect
· Distribution would result in return of roughly $4 billion total cash returned
CHICAGO, November 22, 2011 – To accelerate the return of additional securely held funds to MF Global Inc. customers, CME Group today announced it has increased its financial guarantee to the SIPC Trustee from $250 million to $550 million. CME Group’s proposal to the Trustee is designed to increase the payout percentage from 60 percent to 75 percent in early December. This distribution would include customers holding cash balances and warehouse receipts, as well as customers who received non-sufficient funds checks from MF Global. As a result of this proposal, roughly $4 billion of the $5.5 billion that was supposed to be held by MF Global in segregation will be returned to customers. With this offer, the entire $2.5 billion securely held at CME Clearing will have been distributed.
While the final accounting of customer segregated assets and claims will occur in the bankruptcy process, CME Group is confident that recent reports of significantly larger customer segregated shortfalls are incorrect. CME Group continues to work with the Trustee and the CFTC to finalize this accounting.
Though CME Clearing does not guarantee FCM-held assets, the increase in the amount of CME Group’s previously announced financial guarantee gives the Trustee even greater latitude to make larger interim distributions of cash to customers now, given the monumental task he faces to sort through considerable data and claims in order to complete the MF Global liquidation and make distributions to creditors. CME Group’s previous $250 million guarantee to the Trustee facilitated the Bankruptcy Court’s approval to distribute an additional $520 million to cash-only account holders of MF Global announced last week, as well as the 60 percent distributions to all customers recently announced by the Trustee. CME Trust also has pledged an additional $50 million to CME Group market participants in the event there is a shortfall at the conclusion of the Trustee’s distribution process.
“From day one, we have worked hard to protect the interests of all MF Global customers, and we continue to make very significant progress,” said CME Group Executive Chairman Terry Duffy. “In four weeks, CME Group has been the only exchange and clearing house to offer a financial guarantee to help return funds to all customers. We transferred 15,000 accounts and $1.45 billion in collateral through the bulk transfer process, we previously offered a $250 million guarantee that facilitated approval of additional distributions, and now we are increasing our guarantee to $550 million to accelerate the return of substantial cash to MF Global customers. We’re pleased to be able to assist customers in recovering up to 75 percent of their segregated assets at this time, and we will continue to seek the recovery of additional customer funds.”