CME to Transfer MF Global Cash Friday


NEW YORK (Dow Jones) — CME Group Inc. said it will begin transferring roughly $520 million of cash that has been frozen in accounts of former customers of MF Global Holdings Ltd. to new firms starting Friday.

The transfer covers just a narrow spectrum of former MF Global customers — those who owned cash-only accounts as of Oct. 31, the date of the firm’s bankruptcy filing. But the transfer is expected to provide some measure of relief for those customers, whose funds have been completely frozen since then.

The transfer affects approximately 15,000 customers, and the funds being transferred represent 60{fe867fa2be02a5a45e8bbb747b653fe2e9d0331fd056b85cd0c1a3542435a96e} of the cash in their accounts, CME said in a note to traders. The transfer is part of an order approved last week by the New York bankruptcy judge overseeing the unwinding of the firm.

Customers whose accounts are affected should be able to resume trading starting Dec. 1, CME said.

The funds in accounts owned by former MF Global customers have been largely frozen since the firm’s bankruptcy filing because a portion of customer funds has been found to be missing. The trustee overseeing the firm’s wind-down has sought the transfer of customer funds piece by piece as it combs through the company’s books and tries to account for the missing funds.

The first transfer, approved in early November, allowed for the shifting of open positions plus 60{fe867fa2be02a5a45e8bbb747b653fe2e9d0331fd056b85cd0c1a3542435a96e} of the collateral backing them, to new firms. But it left frozen accounts that contained only cash. Those customers will get 60{fe867fa2be02a5a45e8bbb747b653fe2e9d0331fd056b85cd0c1a3542435a96e} of their cash under a second transfer approved last week.

The trustee plans to seek approval next month for a third transfer of cash for customers who have received only open positions and collateral.

On Monday, the bankruptcy trustee said about $1.2 billion in customer cash remains unaccounted for. The figure is nearly double a previous estimate, and has raised questions about whether enough cash is available to replenish 100{fe867fa2be02a5a45e8bbb747b653fe2e9d0331fd056b85cd0c1a3542435a96e} of the assets in customers’ accounts.

CME on Tuesday disputed the $1.2 billion figure, saying it is confident that the shortfall is smaller.


Source:  Dow Jones

Posted by Haylie Shipp


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