UPDATE: MF Global Trustee: Non-Cash Property Must Be Claimed By Nov 15

Customers of MF Global Holdings Ltd. (MFGLQ) have until Nov. 15 to request the return of noncash collateral held by the collapsed broker-dealer, according to the trustee handling the firm's liquidation.

Asset managers and investors that traded through MF Global will have to pay the firm's estate an amount "determined by the trustee" before the collateral is returned, representatives of the trustee wrote in a notice issued to MF Global's clients and distributed by exchange operator CME Group Inc. (CME) late Monday.

CME separately told traders that a move to temporarily ease margin requirements, brought on by the mass transfer of MF Global customers to other clearinghouse member firms, would wrap up on Nov. 17.

CME and the trustee, James Giddens, are working to divide and distribute MF Global's business among rival firms with the aim of freeing up some of the investment capital that became frozen with MF Global's bankruptcy filing last Monday. At the close of business Tuesday, customers with open trading positions are expected to gain access to most of the exchange-held margin for trades they had on at the time MF Global filed for bankruptcy.

The trustee's late-Monday notice covers certain "non-cash property" including warehouse receipts, bills of lading and other securities registered in customers' names that are securing open contract positions. If the trustee has not received instructions for the return of such property by Nov. 15, he intends to liquidate the holdings, according to the notice. Clients whose property ends up sold by the trustee will still have a claim against MF Global Inc. in bankruptcy proceedings.

In the U.S., MF Global was estimated to have held about $5.5 billion in customer funds on deposit at the time of its bankruptcy filing. CME's effort to shift open trading positions to other clearinghouse member firms is seen freeing up an estimated $1.5 billion of that figure.

CME over the weekend told traders that the exchange operator would temporarily lower some requirements for margining derivatives trades on its market as former customers of MF Global were moved to new homes with rival firms. The aim was to shield MF Global's clientele from being hit with heavy margin calls as their accounts reopened, since a portion of their collateral remains with the failed firm's estate.

Required margin levels temporarily lowered by CME will begin on Friday, Nov. 11, to rise back toward their normal ratios, with subsequent rises slated for Nov. 15 and Nov. 17, at which point the normal levels will be back in play, CME told traders late Monday.

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

--Doug Cameron contributed to this article.

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