CME Executives Defend Actions After MF Global Collapse
05/23/2012| 08:24pm US/Eastern
--CEO Gill: Review of CME's handling of MF Global's bankruptcy "came out fine"
--Protesters disrupt shareholder meeting, demand CME return tax breaks
--CME's Duffy: Illinois government "cut very good deal for itself"
(Updates with details on shareholders meeting protest, and comments from CME executive chairman Duffy.)
By Howard Packowitz
Leaders of exchange operator CME Group Inc. (>> CME Group Inc.) said on Wednesday that they acted properly and in accordance with bankruptcy laws following the collapse of brokerage firm MF Global (>> MF Global Holdings Ltd).
"All of the information has yet to come out," said CME Executive Chairman Terry Duffy, responding to questions at CME's annual shareholder meeting. MF Global customers are said to be missing some $1.6 billion that couldn't be accounted for as the brokerage collapsed.
A review by an outside firm of CME's actions "came out fine," said the company's new chief executive, Phupinder Gill, who took over for the retiring Craig Donohue on May 1.
Nothing more could have been done to speed up the process or make it go more smoothly, said Gill. He said CME's hands were tied by bankruptcy laws.
Duffy told shareholders he saw staffers work "around the clock" to place clients with new clearing firms.
Duffy said CME's clearing house did its job during the crisis, even though MF Global was considered a "firm of good standing" leading up to its bankruptcy.
Earlier, several shareholders halted the proceedings for about 15 minutes, demanding CME return tax breaks it is receiving from the state government as an incentive to keep its headquarters in Illinois. They shouted, "Pay your fair share," as security personnel escorted them out of the room. Outside the building, about 100 protesters assembled, yelling "We are the 99%."
CME threatened to leave the state last year when lawmakers boosted the corporate tax rate to 7% from 4.8%. By year's end, CME and the state signed off on a deal to tax the exchange on 27.54% of all electronic trades, down from 100%. Census data supported CME's claim that most of the electronic transactions don't originate in Illinois.
"I think the state cut a very good deal for itself," said Duffy who met with reporters after the shareholders' meeting.
CME is the top corporate taxpayer in Illinois, but will rank 17th when the tax deal is fully implemented, said Duffy.
-By Howard Packowitz, Dow Jones Newswires; (312) 750-4132; firstname.lastname@example.org