CME Group Protecting Trades Through Their Clearing
The demise of MF Global has sent shockwaves through the metals trading community – including those trading both OTC (over-the-counter) and through the CME Group/NYMEX clearing systems.
The CME Group, with its HR Futures and its new HR Coil Options contracts, has been informing the financial community of its intention to cover all trades made by MF Global through CME Group clearing. In their most recent press release (see below) the CME Group proposes distributing the entire $2.5 billion held at CME Clearing.
Steel Market Update and our instructors from Crunch Risk, LLC and the CME Group who are also our partners in our Hedging Price Risk workshops – encourage the steel community to educate themselves about both the positives and potential pitfalls associated with using financial instruments in order to hedge steel price risk.
Needless to say, the MF Global situation will be a topic of conversation during the full day workshop.
If you have any questions please do not hesitate to contact our office at: 706-216-5440 (800-432-3475) or by email at: email@example.com
Following is the press release: November 22, 2011
To Our CME Group Trading Community,
To accelerate the return of additional securely held funds to MF Global Inc. customers, CME Group today increased its financial guarantee to the SIPC Trustee from $250 million to $550 million . Our guarantee is designed to increase the payout percentage to all customers from 60 percent to 75 percent in early December, resulting in the return of roughly $4 billion of the $5.5 billion that was supposed to be held by MF Global in segregation. Under our proposal, the entire $2.5 billion securely held at CME Clearing will be distributed.
In addition, while the final accounting of customer segregated assets and claims will occur in the bankruptcy process, we can assure you that CME Group is confident that recent reports of significantly larger customer segregated shortfalls are incorrect.
As always, the protection of our customers and the integrity of all futures markets continue to be our two chief concerns. In the four weeks since the failure of MF Global, 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. We will continue to keep you updated throughout this process, and we will continue to post information on this matter to www.cmegroup.com/mfglobal.