* Court to consider releasing $520 mln of customer cash
* Another 141 employees laid off
* Regulators still looking for $600 mln of missing funds
* MF Global is a "teachable moment"-CFTC's O'Malia
By Nick Brown and Christopher Doering
Nov 16 (Reuters) - Thousands of former MF Global Holdings Ltd customers may soon recover $520 million of cash held in their accounts even as the bankrupt brokerage lays off more workers.
In other developments on Wednesday, a U.S. futures regulator called for robust oversight to limit the potential for another collapse and authorities appeared no closer to finding millions of dollars in missing customer money.
A bankruptcy judge on Thursday will consider a request by James Giddens, the trustee supervising the liquidation of the MF Global Inc broker-dealer unit, to release $520 million to between 15,000 and 21,000 commodities customers who held only cash in their accounts.
The amount represents 60 percent of the $869 million of cash that had been frozen, Giddens said in papers filed late Tuesday in U.S. bankruptcy court in Manhattan. A transfer could be made "within days" of court approval, Giddens said.
Commodities traders and exchanges have clamored for the release of the money. They contend that the freeze punished customers who amassed the cash by liquidating their trading positions prior to MF Global's bankruptcy.
Customers may still get a payout even as investigators continue their pursuit of about $600 million that has gone missing from customers' futures accounts at MF Global.
The Commodity Customer Coalition, a group of former MF Global customers, on Wednesday said Giddens should be distributing even more money, saying the trustee has access to more than $1.4 billion.
At a hearing on Wednesday before U.S. Bankruptcy Judge Martin Glenn, who oversees the bankruptcy, MF Global lawyer Kenneth Ziman said the company has laid off another 141 people, on top of the 1,066 workers let go by Giddens last Friday.
Close to half of MF Global's workers have lost their jobs. Ziman also said talks to obtain financing to keep MF Global operating in bankruptcy have "paused," though the company has won an extension through Nov. 30 to access $8 million of cash collateral held by JPMorgan Chase & Co .
Glenn postponed until Nov. 22 a decision on setting procedures for how to handle customer claims.
Meanwhile, Giddens' lawyer James Kobak said the trustee now estimates he has transferred 14,500 customer accounts with $1.57 billion of associated collateral to other brokerages. That compares with his earlier estimate of 17,000 accounts with $1.5 billion of collateral.
Kobak had no further details on the missing $600 million. "Exactly what happened, I don't think anyone knows," he said.
MF Global filed for bankruptcy protection on Oct. 31 amid a liquidity crunch as customers, credit-rating agencies and counterparties worried about its $6.3 billion bet on European sovereign debt.
New York-based MF Global had been run by former Goldman Sachs & Co chief Jon Corzine, who resigned on Nov. 4.
The bankruptcy was the seventh-largest in U.S. history, according to BankruptcyData.com and Reuters data.
Some of the regulatory focus has concerned whether MF Global improperly mixed customer funds with its own.
Scott O'Malia, a commissioner at the Commodity Futures Trading Commission, urged his agency to help ensure that intermediaries such as MF Global properly maintain segregated accounts, and even perhaps hire independent overseers.
"Many have said that the failure of MF Global was not systemic and that we are lucky. I don't view it in the same light," O'Malia said in a statement posted on the CFTC's website.
O'Malia urged the CFTC to require greater disclosures to customers about brokerages' proprietary trading, risk exposure, and means to ensure that their funds are segregated.
"The Commission must use MF Global as its own teachable moment" and reconsider its rulemaking pursuant to last year's Dodd-Frank financial reform law, said O'Malia, one of two Republican commissioners on the five-member CFTC.
SEC ALSO LOOKS FOR CUSTOMER FUNDS
Other agencies, including the Department of Justice and the Securities and Exchange Commission, are also trying to locate the missing customer funds.
Robert Cook, director of the SEC division of trading and markets, told the Senate Banking Committee on Wednesday that regulators are still struggling to verify MF Global's assurances that customer funds in securities accounts are accounted for.
"As you can imagine, we are not taking that at face value," he said.
Cook added that absent the futures accounts shortfall, there would have been a "significant chance" that MF Global could have been saved.
The shortfall became apparent just hours before MF Global's bankruptcy and in part prompted Interactive Brokers Group Inc to abandon talks to buy many of the company's assets.
Giddens said CME Group Inc , which operates the world's largest futures exchange, proposed a $250 million guarantee to the MF Global Inc bankruptcy estate in case some of the payouts ultimately prove too high.
A federal insurance fund covering brokerage customers does not extend to commodities customers.
The cases are In re: MF Global Holdings Ltd et al, U.S. Bankruptcy Court, Southern District of New York, No. 11-15059; and In re: MF Global Inc in the same court, No. 11-02790.