MF Global trustee liquidates broker's CME Group memberships

CHICAGO Mon May 20, 2013 8:10pm EDT

CHICAGO May 20 (Reuters) - The trustee liquidating MF Global has sold a collection of the bankrupt broker's CME Group memberships for amounts below recent selling prices, according to a list of transactions published by the exchange on Monday.

Eighteen months after MF Global collapsed, Trustee James Giddens last week sold a variety of memberships owned by the firm that bestow different trading rights on the holders.

The firm, which was among the top brokers at CME Group's exchanges, made a $6.3 billion bet on European sovereign debt and went bankrupt after dipping into customer accounts to try to meet margin calls, in violation of industry rules.

Kent Jarrell, a spokesman for Giddens, said he "can't get into the details concerning exchange memberships." CME Group, the largest U.S. futures exchange operator, declined to comment on the memberships.

On Thursday, a membership owned by MF Global that allows the holder to trade any contract listed at the Chicago Mercantile Exchange sold for $350,000, according to the weekly list of transactions posted on the exchange's Chicago trading floor.

That was 12 percent lower than a sale made two days earlier and the lowest price since 2006, CME data show.

Another membership that allows the holder to trade foreign exchange, interest rate, equity index futures and other products sold for $160,000. That was 12 percent lower than another seller earned two days earlier.

A membership that allows the owner to trade index futures contracts, lumber and all Chicago Mercantile Exchange options contracts sold for $52,000, according to the notice. That was down 13 percent from the price two days earlier.

Another MF Global membership that allows the holder to trade contracts relating to emerging market countries and a restricted set of financial products sold for $8,000. Two days earlier, that type of membership sold for $18,500, almost 57 percent more, CME data show.

Traders who bought memberships before MF Global's sales last week complained that the deals drove down prices.

Many MF Global customers are still fuming that no one has been charged in the firm's collapse.

U.S. congressional investigators have said former Chief Executive Jon Corzine failed to maintain the systems and controls necessary to protect customer funds.

The sale of memberships at reduced prices "shows the futures markets are still very vulnerable from the days of Corzine and MF Global," said Thomas Grisafi, president of Indiana Grain Co and a membership owner.

Corzine, a former U.S. senator, governor of New Jersey and chief executive of Goldman Sachs, has denied knowing that customer funds were being improperly used.

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