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CME Group statement on MF Global

CME Group statement on MF Global

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Published by DealBook

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Categories:Types, Business/Law
Published by: DealBook on Nov 02, 2011
Copyright:Attribution Non-commercial


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CME Group Statement Regarding MF Global
CHICAGO, November 2, 2011 – CME Clearing is holding substantial excess margincollateral from MF Global Inc. (“MF Global”) and therefore continues to be in a strong financialposition, both with respect to MF Global and more generally. MF Global’s customer positions onCME Group exchanges were and continue to be substantially over-collateralized at CME Clearing.As of today, the proprietary positions of MF Global have been liquidated with no adverse marketimpact, leaving a substantial part of that collateral to be applied to MF Global's obligations at CME.Our primary focus is the protection of our customers and the integrity of our markets. Our current efforts are focused on working diligently with the CFTC and the SIPC trustee to facilitatethe transfer of customer positions to other qualified clearing member firms, with as much CMEClearing held collateral as will be legally permitted. CME has no control over the disposition of customer segregated funds that are held by MF Global and not held by CME Clearing. Thosefunds are now under the control of the SIPC trustee. Nevertheless, we have urged the SIPCtrustee to facilitate the transfer of such funds from MF Global to MF Global customers.With respect to the apparent shortfall in customer segregated funds held by MF Global (andwhich were not on deposit with CME Clearing), it appears that any transfer of such funds occurredfollowing the completion of CME audit procedures respecting such funds and in violation of CFTCRegulations and CME rules. CME completed its on-site review last week. At that time, the resultsof our review indicated that MF Global was in compliance with its segregation requirements. It nowappears that the firm made subsequent transfers of customer segregated funds in a manner thatmay have been designed to avoid detection insofar as MF Global did not disclose or report suchtransfers to the CFTC or CME until early morning on Monday, October 31, 2011. CME fullydischarged its auditing procedures in accordance with applicable procedures and standards and isworking with regulators and authorities to investigate these transfers.CME conducts regulatory financial examinations in accordance with the Joint AuditCommittee procedures and standards.http://www.wjammer.com/jac/The focus of theseexaminations is to effectively monitor the firm’s financial records to determine the firm’s fullsegregation compliance and to monitor any necessary corrective action. CFTC regulations andCME rules require maintenance of excess segregated funds at all times. Clearing firms are notpermitted to transfer funds from the segregated account which will result in an under-segregatedcondition. CFTC Regulations and CME Rules also require clearing firms to calculate their customer segregated position daily and notify both the CFTC and CME whenever it knows or should have known that the customer segregated position was under-segregated. None of MF
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Media ContactsInvestor Contact
Anita Liskey, 312.466.4613John Peschier, 312.930.8491Laurie Bischel, 312.648.8698CME-Gnews@cmegroup.comwww.cmegroup.mediaroom.com

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