CME Group Inc., the world’s largest futures exchange, increased the amount it’s willing to guarantee to the bankruptcy trustee of MF Global Holdings Ltd. to $550 million from $250 million.
“CME Group’s proposal is designed to increase the payout percentage from 60 percent to 75 percent, and to accelerate the timing of that distribution to early December,” the Chicago-based company said today in an e-mailed statement. James Giddens, the trustee appointed to liquidate the company and distribute funds to customers, has said he could return 60 percent of client money as of today.
CME Group also said it was “confident” that the trustee’s increased total of missing customer money was wrong. “While the final accounting of customer segregated assets and claims will occur in the bankruptcy process, CME Group is confident that reports of significantly larger shortfalls are incorrect,” the company said.
The shortfall in MF Global Inc.’s U.S. segregated customer accounts may exceed $1.2 billion, more than double what was previously estimated, Giddens said yesterday.
That would mean customer accounts are missing about 22 percent of their total of $5.4 billion. A shortfall of 11 percent had been previously estimated by a person with knowledge of probes into the firm’s collapse. Giddens said yesterday that forensic accountants and investigators are working “around the clock,” and the estimate may change.
MF Global filed the eighth-largest U.S. bankruptcy on Oct. 31 after a ratings downgrade and $6.3 billion in European sovereign debt eroded investor confidence in the New York broker. MF Global moved hundreds of millions of dollars from its futures client accounts to other accounts before the filing, according to a person familiar with the audit of the company.
While CME Group doesn’t guarantee assets held for customers at its futures brokerage members, it is acting to give the trustee “greater latitude to make larger interim distributions” to customers.