CHICAGO, Feb. 2, 2012 /PRNewswire/ -- CME Group today
announced that it will establish a $100
million fund designed to provide further protection of
customer segregated funds for U.S. family farmers and ranchers who
hedge their business in CME Group futures markets. In light
of the recent MF Global failure, in which a clearing firm violated
CFTC regulations and misused customer monies that should have been
kept segregated, CME Group is adding this extra security measure to
protect the country's food producers who are using CME Group
futures markets to hedge their crops and livestock that feed the
world.
Under the Family Farmer and Rancher Protection Fund, expected to
be in effect by March 1, 2012,
farmers and ranchers using CME Group products will be eligible for
up to $25,000 per account in the case
of losses resulting from the future insolvency of a clearing member
or other market participant. Farming and ranching
cooperatives also will be eligible for up to $100,000 per cooperative. If losses in a future
failure total more than $100 million,
participants will be eligible for a pro-rata share of the fund, up
to $100 million. This new fund
is expected to be backed by an insurance policy and will not be
available retroactively.
"Many have been hurt by MF Global's bankruptcy," said CME Group
Executive Chairman Terry
Duffy. "Though all the facts are not yet in, we do
know our industry needs to focus on enhancing protections for
customer segregated monies held at the firm level. CME Group
is pleased to introduce this Family Farmer and Rancher Protection
fund for America's farmers and ranchers to ensure they do not find
themselves in a position similar to the first two weeks of the MF
Global bankruptcy. We fully understand the need for a
holistic solution to restore confidence in the marketplace and are
actively working with the industry to develop
recommendations. In the meantime, we believe this targeted
first step is important to reassure hedgers so they can
appropriately manage their risks and avoid business
disruptions."
"From the beginning of the MF Global failure, CME Group has been
committed to working with our customers and all other stakeholders
to strengthen protections of customer segregated funds held at the
firm level," said CME Group CEO Craig
Donohue. "The fund announced today is the first step
in what will be a series of enhancements to industry customer
protection mechanisms. While we are working in partnership
with the National Futures Association, the Futures Industry
Association, our fellow exchanges, FCMs and customers on a broad
range of solutions, we believe this is a positive step that CME can
take today. The remaining steps are ones that we will work to
develop an industry consensus on. Among the areas we look
forward to exploring are stronger rules regarding custody of
customer funds, firm-level internal controls and insurance for
market participants."
The Family Farmer and Rancher Protection Fund, will serve as an
additional layer of customer protection in addition to current CFTC
regulations and CME Group exchange rules.
As the world's leading and most diverse derivatives marketplace,
CME Group (www.cmegroup.com) is where the world comes to manage
risk. CME Group exchanges offer the widest range of global
benchmark products across all major asset classes, including
futures and options based on interest rates, equity indexes,
foreign exchange, energy, agricultural commodities, metals, weather
and real estate. CME Group brings buyers and sellers
together through its CME Globex® electronic trading platform and
its trading facilities in New York
and Chicago. CME Group also operates CME Clearing, one of the
world's leading central counterparty clearing providers, which
offers clearing and settlement services for exchange-traded
contracts, as well as for over-the-counter derivatives transactions
through CME ClearPort®. These products and services ensure
that businesses everywhere can substantially mitigate counterparty
credit risk in both listed and over-the-counter derivatives
markets.
CME Group is a trademark of CME Group Inc. The Globe Logo, CME,
Globex and Chicago Mercantile Exchange are trademarks of Chicago
Mercantile Exchange Inc. CBOT and the Chicago Board of Trade are trademarks of the
Board of Trade of the City of
Chicago, Inc. NYMEX, New York Mercantile Exchange and
ClearPort are registered trademarks of New York Mercantile
Exchange, Inc. COMEX is a trademark of Commodity Exchange,
Inc. All other trademarks are the property of their
respective owners. Further information about CME Group (NASDAQ:
CME) and its products can be found at www.cmegroup.com.
CME-G
SOURCE CME Group