Smart move by CME. http://dealbook.nytimes.com/2011/11/11/cme-group-offers-300-million-for-mf-global-customers/ 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 Globalâs 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. âCME Group believes it is critical to pursue this option with the trustee to distribute additional securely-held customer assets,â CME Groupâs chief executive, Craig Donohue, said in a statement. âOur primary concerns are the protection of our customers at CME Clearing and the integrity of all futures markets.â MF Globalâs 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. Thereâs also customer cash reserves that remain frozen. CME will provide a $250 million guarantee to the trusteeâs office so it has âgreater latitude to make an interim distribution of cash to customers now,â 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. Customers will only draw from the overall $300 million pot if federal regulators are unable to locate the missing money at MF Global. âWe look forward to seeing the details of the CME proposal and hope it might help us as we develop an expedited claims process,â said Kent Jarrell, a spokesman for the trustee. The Commodity Futures Trading Commission and other federal regulators are continuing to search for the missing funds. The Federal Bureau of Investigation is also examining the case. âThe failure of MF Global and the firmâs mishandling of customer segregated funds is absolutely uncharted territory for this industry, and this extreme measure will help to provide all former MF Global customers access to their account balances that had previously been frozen in the liquidation,â Terry Duffy, CME Groupâs executive chairman, said in the statement.