CME Is Legally Liable For MF Global Customer Losses

More than two dozen foreign banks with at least US$50-billion of global assets would face stricter U.S. capital rules under a Federal Reserve plan that’s aimed at lowering risks to the financial system. The Fed proposed that most of the banks also be forced to comply with more stringent liquidity rules and pass stress tests analyzing how they would fare in a severe economic downturn. The board voted today to seek public comment on the plan for 90 days. It would take effect in July 2015.

By Avery Goodman: After dithering for far too long, CME Group, Inc. (CME) has finally agreed to guarantee up to $300 million worth of MF Global (MFGLQ.PK) customer funds. I hopes my coverage of this issue helped to point them in the right direction.

ByStephen Ho: Bottom Line

This guest post was submitted by David Moss, professor at Harvard Business School, author of When All Else Fails: Government As The Ultimate Risk Manager, and founder of the Tobin Project.

As Chairman of the Federal Reserve, Ben Bernanke does not have absolute power over the direction of U.S. monetary policy.  Rather, he must develop a consensus from amongst the differing viewpoints of the 12 members of the Federal Open Market Committee (FOMC).

ByJon Parepoynt:Founded as the Chicago Butter and Egg Board in 1898, CME Group (CME) has grown into a substantial publicly traded futures exchange operator. CME is the largest derivative exchange operator in the world and handles 90% of all futures trading in the U.S. Much like a toll collector, CME charges a transaction fee for trading and clearing futures contracts on their exchanges.

JPMorgan says it received "multiple clear oral assurances from senior MF Global officials" that a $175 million transfer from the firm to cover an overdraft did not include customer money. The claim comes in testimony prepared for a Congressional hearing Wednesday on MF Global's collapse by Diane Genova, JPMorgan's deputy general counsel. It has since emerged that the $175 million did in fact draw on customer funds, in violation of industry rules and contributing to a shortfall of some $1.6 billion.