Reuters has exclusively reported that the CME Group's largest foundation will stop giving grants to Chicago-area charitable
organizations and institutions. The company says the change is due to the failure of MF Global Holdings, Inc., which CME Group says improperly used millions of customer dollars. Because of this, the Trust's funds, estimated at $50 million, will now have to be used to compensate MF Global Holdings customers. The Trust was originally intended to act as a rainy day fund in the case of broker default, but federal regulations had seemed to make such an occurrence highly implausible. That is why, according to Reuters, CME's board voted to turn the Trust into a charitable foundation in 2005.
"CME Group will continue to honor some previous Trust commitments going forward - even after the $50 million is paid out," CME spokeswoman Laurie Bischel told Reuters. "Though the CME Trust will be used to help customers of MF Global, CME Group remains committed to our communities and will continue to provide support to charitable organizations as possible through our other programs and corporate foundations."
News of the Trust's reversal back to its original purpose comes just after Gov. Quinn signed a tax package Friday that will save CME Group $77 million every year after it takes full effect in 2014. CME Group Executive Chairman Terrence Duffy says the shortfall from MF Global Holdings' demise is estimated to be $700 million to $900 million. The company's two smaller charitable foundations, which donated $1 million last year, will not see any changes due to the closing of MF Global Holdings.