CME Tries To Lessen Damage of MF Global Crimes

Dealbook:

The CME Group, the major exchange where MF Global did business, took the unusual step on Friday of pledging $300 million to help ailing customers of the bankrupt brokerage firm.
The money will be an insurance policy of sorts, handed over to the trustee overseeing MF Global, and is intended to backstop the roughly $600 million in customer funds missing from the firm. While CME is not sending the money directly to customers, the announcement will provide an extra cushion that could enable the trustee to dole out additional funds.
The move comes after days of fierce complaints from MF Global’s futures industry clients, including farmers and hedge funds, who have called on CME to step in to plug the $600 million shortfall. The exchange has no legal obligation to do so, but customers have hammered CME, saying the safety of the futures industry is at stake.
“CME Group believes it is critical to pursue this option with the trustee to distribute additional securely-held customer assets,” CME Group’s chief executive, Craig Donohue, said in a statement. “Our primary concerns are the protection of our customers at CME Clearing and the integrity of all futures markets.”
MF Global’s customers, including farmers and traders, were frozen out of trading by the CME Group on the day MF Global filed for Chapter 11. While CME has transferred some of their positions to other brokerage firms, customers received only about 60 percent of the cash they posted to directly back their trades. There’s also customer cash reserves that remain frozen.
CME will provide a $250 million guarantee to the trustee’s office so it has “greater latitude to make an interim distribution of cash to customers now,” CME said in the statement. CME Trust, a related entity that was set up like an insurance fund for trying times like these when customers lose money after a brokerage firm fails, also pledged $50 million.

I don't know what the folks at MF Global were thinking, but if nobody ends up in jail, our system is completely corrupt.  This case shows how real people are screwed over in the casino financial system.  We need stronger regulation of the financial system, and the outright end of many financial products.