U.S. COMMODITY FUTURES TRADING COMMISSION

Three Lafayette Centre

1155 21st Street, NW, Washington, DC 20581

Telephone: (202) 418-5000

November 16,2011

James W. Giddens

Hughes Hubbard & Reed LLP

One Battery Park Plaza

New York, NY 10004-1482

Re: Request for Authorization to Transfer Accounts

Dear Mr. Giddens:

This is in rcsponse to your letter dated November 15, 2011, in which you request action by

the Commodity Futures Trading Commission (the "Commission") authorizing the transfer of

accounts that are not routinely eligible for transfer under section 764(b) ofthe Bankruptcy Code by

reason of Commission Regulation 190.06(e), as part ofthe liquidation ofthe business ofMF

Global, Inc. ("MFG") (Case No. 11-2790) (Bankr. S.D.N.Y.) (the "MFG Case"). MFG is a

registered futures commission merchant ("FCM") and is being liquidated pursuant to the Securities

Investor Protection Act of 1970. 1 You request the authority to transfer the accounts to a variety of

qualified FCMs that have agreed to accept such accounts for the benefit of MFG's commodity

futures customers.

Based on your letter, prior correspondence and discussions, and pleadings and Orders filed

in connection with the MFG Case, we understand the following: MFG will transfer customer

accounts ofMFG (the "Cash-Only Customer Accounts") which accounts did not benefit from

transfers of collateral pursuant to the November 2,2011 Order ofthe Bankruptcy Court in the MFG

Case (the "November 2 Bulk Transfer Order."). The November 2 Bulk Transfer Order authorized

bulk transfers of commodity futures positions ofMFG customers, along with a portion ofthe

collateral associated with such positions, held at various derivatives clearing organizations ofwhich

MFG was a member. You now intend to transfer accounts holding, in each case, sixty percent of

the cash held for the Cash-Only Customer Accounts (in each case, as reflected in the books and

records ofMFG) to qualified FCMs (the "Transferees") that have agreed to accept such Cash-Only

Customer Accounts for the benefit ofMFG's commodities futmes customers. Such accounts will

be "[a]ccounts which contain no open commodity contracts" within the meaning ofRegulation

190.06(e)( I)(iV).2

MFG is also a broker-dealer registered with the Securities and Exchange Commission.

17 C,F.R, §§190.06(c)(I)(iv). Commission regulations referred to in this letter are found at 17 C.F,R. Ch. I

(2011),
James W. Giddens

November 16, 20 II

Page 2 of2

Regulation 190.06(e)(I) provides that, "[s]ubject to the requirements of paragraph (e)(2) ".

all accounts are eligible for transfer after the filing date pursuant to Section 764(b) ofthe

Bankruptcy Code, except ... (iv) [a]ccounts which contain no open commodity contracts."

Moreover, Regulation 190.06(e)(2) prohibits the transfer, in respect of any eligible account, of

property whose value "would exceed the funded balance ofsuch account based on available

information as ofthe close of business on the business day immediately preceding transfer" less the

value of prior transfers.

You are requesting relief for transfers of accounts that are ineligible for transfer pursuant to

Regulation 190.06(e)(1 )(iv). You state that you "believe[] that the proposed distribution of

approximately sixty percent [ofthe value of each Cash-Only Customer Account] is prudent and will

not result in over-payments." You note that the Chicago Mercantile Exchange Group, Inc. has

agreed to provide a $250,000,000 guarantee to the estate to provide security against the nonrecovery

of potential overpayments (should it ultimately be determined that these transfers lead to any

customers receiving more than their pro rata share ofthe customer funds, which overpayments are

not recovercd).3 You also notc that you "will, as promptly as is practicable and prudent, true up any

difference as between the net equity of' accounts that did bencfit from transfers of collateral as part

ofthe Bulk Transfer Order (taking into account the amounts transferrcd as part ofthe that Order)

and the amounts to be transferred to the Cash-Only Customer Accounts.4

The fact that an account is not eligible for transfer pursuant to Regulation 190.06(e)(I) does

not mean that the transfer ofsuch an account may not be authorized. Regulation 190.06(h)(2)

empowers the Commission, "[n]otwithstanding any other provision of' Regulation 190.06, to, "in

appropriate cases and to protect the public intcrest ... [p]ermit transfers of accounts which do not

comply with the requirements of' Regulation 190.06.

The above-described transfer ofthe Cash-Only Customer Accounts would result in the

ordcrly and prompt return ofsubstantial property to customers within a few weeks ofthe

commencement ofthis liquidation procecding. The Commission concludes, in these circumstances,

that this transfer of accounts that are not "cligible" within the meaning ofRegulation

190.06(e)( I)(iv) is both appropriate and in the public interest, and therefore is authorized pursuant

to Regulation 190.06(h)(2).

If you have any questions concerning this correspondence, please contact Robert B.

Wasserman, ChiefCounsel, Division ofClearing and Risk, at (202) 418-5092.

poos,.~

David Stawick

Secretary ofthe Commission

See. Regulation 190.08(d)(5) (plan of distribution must require "adequate security to the debtor's estate for the

nonrecovery of any overpayments by the trustee")

See id. (plan must distribute an equal percentage of net equity to all public customers).