CME struggles with MF Global default
11 November 2011 Chicago
Image: Shutterstock
CME has announced that the validation of collateral balances in some 15,000 accounts is taking longer than originally anticipated as the CFTC confirms an investigation has been opened.
After an auspicious beginning and coordination effort, the continuing situation seems to be taking a turn for the worse, particularly in light of about $600 million in missing client funds.
"CME Group recognizes the urgency of the situation and is working to complete this process
as soon as possible...[CME] is making substantial progress on verifications and continues to receive
information from the 12 receiving clearing firms and other Derivatives Clearing Organizations
(DCOs) to facilitate this process."
It points to "the massive undertaking of processing data to verify 15,000 accounts for CME Clearing, ICE Clear US, The Clearing Corporation, KCBOT Clearing, MGEX, NYSE Liffe US and OCC, as well as the
unique circumstances of the MF Global bulk transfer process" as the reason for the delays.
Meanwhile, US commodities markets regulator, the CFTC, has announced that Jill Sommers has been appointed as senior commissioner in matters relating to the bankruptcy of MF Global effective immediately. The announcement comes after chairman Gary Gensler recused himself over a past professional relationship at Goldman Sachs with Jon Corzine, the former head of MF Global.
"While the Commission normally does not comment on investigations, the Commission has determined it is in the public interest to confirm the existence of this particular investigation," the CFTC said.
Sommers commented, “Segregation of customer funds is at the core of customer protection in the commodity futures and options markets and must be maintained at all times...Aside from the investigation, we will do everything in our power to ensure public confidence in the markets by directing a review of clearing futures commission merchants (FCMs) to determine that segregated funds are being properly maintained in accordance with the CEA and Commission regulations.”
After an auspicious beginning and coordination effort, the continuing situation seems to be taking a turn for the worse, particularly in light of about $600 million in missing client funds.
"CME Group recognizes the urgency of the situation and is working to complete this process
as soon as possible...[CME] is making substantial progress on verifications and continues to receive
information from the 12 receiving clearing firms and other Derivatives Clearing Organizations
(DCOs) to facilitate this process."
It points to "the massive undertaking of processing data to verify 15,000 accounts for CME Clearing, ICE Clear US, The Clearing Corporation, KCBOT Clearing, MGEX, NYSE Liffe US and OCC, as well as the
unique circumstances of the MF Global bulk transfer process" as the reason for the delays.
Meanwhile, US commodities markets regulator, the CFTC, has announced that Jill Sommers has been appointed as senior commissioner in matters relating to the bankruptcy of MF Global effective immediately. The announcement comes after chairman Gary Gensler recused himself over a past professional relationship at Goldman Sachs with Jon Corzine, the former head of MF Global.
"While the Commission normally does not comment on investigations, the Commission has determined it is in the public interest to confirm the existence of this particular investigation," the CFTC said.
Sommers commented, “Segregation of customer funds is at the core of customer protection in the commodity futures and options markets and must be maintained at all times...Aside from the investigation, we will do everything in our power to ensure public confidence in the markets by directing a review of clearing futures commission merchants (FCMs) to determine that segregated funds are being properly maintained in accordance with the CEA and Commission regulations.”
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