News Release

CME Group Increases Guarantee to $550M to Accelerate Return of 75 Percent of MF Global Inc. Segregated Funds to All Customers

Tue Nov 22 2011

CHICAGO, Nov. 22, 2011 /PRNewswire/ -- 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." 

"The protection of our customers and the integrity of all futures markets continue to be our two chief concerns, and today we are taking aggressive action to further assist customers and restore confidence to the marketplace," said CME Group Chief Executive Officer Craig Donohue.  "Our efforts over the last four weeks have provided greatly needed relief to all futures industry customers of MF Global, and are helping to return nearly $4 billion to customers.  While customer-segregated funds at CME Clearing were protected at all times, this case illustrates that MF Global failed to adequately protect customer funds.  Moving forward, CME Group will be a leading voice in developing industry-wide solutions to enhance confidence in protections for FCM-held customer collateral."

The total 75 percent distribution to customers will include any funds already received in the bulk transfer process November 3 and 4, when 15,000 accounts were transferred with roughly $1.45 billion in collateral, and the distribution of $520 million in cash-only account balances approved by the Court on November 17 and expected to be completed next week.

CME Group is using a number of channels to communicate with customers as soon as information is available and will continue to provide updates throughout the process through its clearing members and on its website for this matter, www.cmegroup.com/mfglobal

The information in this statement does not apply to any other MF Global entity, including separate insolvency proceedings involving the parent company, MF Global Holdings Ltd. or non-US affiliates of MF Global.

As the world's leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) is where the world comes to manage risk.  CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate.  CME Group brings buyers and sellers together through its CME Globex® electronic trading platform and its trading facilities in New York and Chicago.  CME Group also operates CME Clearing, one of the world's leading central counterparty clearing providers, which offers clearing and settlement services for exchange-traded contracts, as well as for over-the-counter derivatives transactions through CME ClearPort®. These products and services ensure that businesses everywhere can substantially mitigate counterparty credit risk in both listed and over-the-counter derivatives markets.

 

CME Group is a trademark of CME Group Inc. The Globe Logo, CME, Globex and Chicago Mercantile Exchange are trademarks of Chicago Mercantile Exchange Inc.  CBOT and the Chicago Board of Trade are trademarks of the Board of Trade of the City of Chicago, Inc.  NYMEX, New York Mercantile Exchange and ClearPort are registered trademarks of New York Mercantile Exchange, Inc.  COMEX is a trademark of Commodity Exchange, Inc.  All other trademarks are the property of their respective owners. Further information about CME Group (NASDAQ: CME) and its products can be found at www.cmegroup.com

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