For former MF Global customers, one of the last barriers to resolving the case has finally come down.  JP Morgan has relinquished its claim to a significant portion of the remaining money for distribution, in addition to agreeing to pay an addition sum to the trustee. Via the Wall St. Journal:

Under terms of the settlement, filed in court Tuesday, J.P. Morgan is set to pay $100 million to reimburse customers, while also releasing claims it had on $417 million in MF Global funds that it had previously returned to the trustee representing customers, James W. Giddens.

See Also: Futures Magazine and NYT Dealbook

JPM giving up on its claim to that $417 million means that the trustee avoids a lengthy court battle (that they hopefully would have won anyway), speeding up the remaining distribution. That $100 million is a nice addition, although it’s only going to add a few more percentage points to the final recovery totals – bringing US MF Global customers to around 95% of their original funds. It may have taken far longer than it should have, but we’re happy to see one of the last barriers brought down, to finally allow former customers to move on.

At the same time, this week also saw the release of a survey conducted by Horizon Cash Management on the impact of the two recent FCM bankruptcies on CTAs and CPOs, and it confirms much of what we’ve seen (and said) about the need to change the way the industry operates moving forward. The summary is quite short and definitely worth a read, but for us the most important part is the list of changes that industry participants are calling for:

• Create an insurance fund.
• Create a separate custodial entity to hold customer funds and ensure real-time verification of balances for customers by regulators.
• Make accountability for violation of laws a reality by imposing severe punishment for those who commit fraud and theft.
• Change the CEA bankruptcy laws to dovetail with other current bankruptcy laws so that laws do not conflict and that there are no loopholes.
• Strengthen current regulation to prohibit FCMs from using customer segregated funds for any self-serving purposes with severe consequences for violations.
• Create regulation and procedures to guarantee that all positions and margin are immediately transferred when a bankruptcy is declared.

If fighting JPMorgan for the return of customer funds seemed daunting, the task of making significant changes to the regulatory landscape may look downright overwhelming. But we think persistence will pay off, and continued outreach like Horizon’s survey is great to see. It shows that the people and businesses who make up the industry support these changes, and if anything is capable of overcome the sclerosis of our regulators, it is a persistent appeal from the community. To paraphrase a famous saying – there’s no stopping an idea whose time has come.