CME Group Inc. will not guarantee any funds that are still missing from customer accounts at bankrupt brokerage MF Global after they are reimbursed by the bankruptcy trustee, the futures exchange’s Chief Operating Officer Bryan Durkin said on Monday.
According to Reuters News Service, Durkin said at the National Grain and Feed Association Country Elevator Conference that such a move would be "unwise" and the CME has a "fiduciary responsibility" to its shareholders.
"We really feel we cannot expose ourselves to that level of responsibility or risk," Durkin told the NGFA Conference. "It's not covered as part of our rules. All of that being said we have taken some very unprecedented steps.
The CME has provided an interim guarantee of $550 million to the bankruptcy trustee to the speed the return of customer funds.
Durkin also said CME was still holding MF Global funds more than a month after the brokerage went bankrupt, adding that the money was "in the context of the remaining collateral that we had on deposit that has not been fully distributed." He did not elaborate or say how much MF Global money the exchange was holding.
A federal bankruptcy judge approved the transfer of $2.2 billion to U.S. commodities customers of failed brokerage house MF Global on Friday. Once the transfer is completed, the customers will have recovered roughly 72% of their money, according to the bankruptcy trustee.
Regulators continue to look for money that went missing from MF Global segregated customer accounts. The trustee has said as much as $1.2 billion is unaccounted for, but Durkin confirmed CME believes the total to be lower than that.
Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.