CME Group to Establish Guarantee Fund


CHICAGO (Dow Jones) — CME Group Inc. announced plans Thursday to beef up protections for some customers through a new $100 million fund that will back losses sustained by “family farmers and ranchers” in the event of another failure like MF Global Holdings.

The fund is slated to be in place by March 1 and will provide up to $25,000 per account should such futures-trading customers suffer losses from the insolvency of a CME clearinghouse member or other market participant, according to CME.

“The fund announced today is the first step in what will be a series of enhancements to industry customer protection mechanisms,” said Craig Donohue, chief executive of CME, in a statement.

Federal investigators continue to probe the late-October downfall of MF Global, among the biggest futures-clearing firms in the U.S., as well as the whereabouts of its client funds. CME, which was the failed firm’s main regulator at the exchange level, has borne some of the frustration among former MF Global customers as an estimated $1.2 billion in assets remains missing.

Earlier Thursday CME reported that fourth-quarter earnings surged with help from a sizable tax-related adjustment, although the exchange operator turned in core results that fell short of expectations amid a lackluster trading environment.

Global economic turmoil drove derivatives-trading activity to record levels last year, helping CME maintain its standing as the world’s largest futures market. The fourth quarter was slower however, particularly in the absence of failed brokerage MF Global.

CME reported that MF Global’s downfall cost the futures exchange company about $3 million in lost revenue for the quarter and drove $27 million in additional expenses.

Source:  Dow Jones

Posted by Haylie Shipp


Notify of
Inline Feedbacks
View all comments
Would love your thoughts, please comment.x