2nd UPDATE: Exchanges Transfer Some MF Customer Business To Other Firms

Exchanges on Friday shifted customer accounts and trading collateral previously overseen by MF Global Holdings Ltd. (MFGLQ) to other clearing firms, part of a worldwide effort to mop up a mess left by the firm's slide into bankruptcy this week.

CME Group Inc. (CME) reported late Friday that it expected to complete by day's end the transfer of about 15,000 MF Global customer accounts alongside about $1.45 billion in trading collateral, which were being taken up by other trade-clearing firms. The shift would complete CME's effort to relocate MF Global's clientele, according to a notice from the company.

IntercontinentalExchange Inc. (ICE) and New York Portfolio Clearing, which handles trades on NYSE Euronext's (NYX) U.S. futures platform, also moved former clients of MF Global in recent days, the firms reported Friday.

The migration aims to free up customers who had trading positions frozen and margin money trapped by MF Global's collapse on Monday. MF Global's bankruptcy filing also revealed a shortfall in client funds held on deposit, estimated at about $633 million. The discrepancy in client assets, which by law are to remain separate from a clearing firm's own funds, has held up the process of transferring some MF Global clients elsewhere.

For this reason, only about 60% of the collateral posted by floor traders and hedge funds and managed by MF Global is being dispersed as part of the transfer.

"CME Clearing continues to hold MF Global proprietary and customer collateral that will be distributed upon instructions from the Trustee and the bankruptcy court," CME officials said in a statement Friday.

The court-appointed trustee overseeing the liquidation of MF Global has authorized CME to transfer $1.45 billion of the $2.5 billion in collateral held against trades on CME's derivatives markets. The remainder remains held at CME's clearinghouse until the trustee directs it to be released.

IntercontinentalExchange in the U.S. was affecting similar large-scale transfers of client business to several firms on Friday, after completing a similar, smaller-scale effort for its Canadian market. On its larger U.K. platform, ICE for several days has been transferring individual customer accounts to other clearing firms.

New York Portfolio Clearing reported that it had completed the transfer of all MF Global clients to rival firms on Friday.

-By Jacob Bunge, Dow Jones Newswires; 312-750-4117; jacob.bunge@dowjones.com

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