I remember getting to the floor that day and seeing Charlie Carey, the director of the CBOT, being told by security that he was not allowed on the floor. Like many higher-ups in the CME, his firm cleared MF. I will never forget the look on the faces of all the floor locals as they scrambled to get new clearing firms, with no money in their accounts. All the people who lost jobs, all the customers who lost money and all the stress it put on the industry can never be paid back.

It’s been a long hard run for the futures and options industry since the collapse of MF Global. It was only 18 months ago that hundreds of locals, clerks and desk people were locked out from the CME Group trading floors. There have been a lot of good and bad days on the floor, but what Jon Corzine pulled was a crime and one that he got away with.

Timing
The timing could not have been worse. The credit crisis still devouring everything in its path, volumes slipping, and then BAM, everything came to a standstill. Billions of dollars missing and Jon Corzine, the head of MF, the culprit. The markets were slowing as we went into the fall of 2011, but MF Global made sure it was going to be the worst season of all for the trading floor.

Sinking Feeling
For several years I had thought something was not right. I had not heard that MF had closed its doors, but I knew long before the company went down that the people who ran MF Global were the same crew that helped take down Refco. The moving around of customer segregated funds was one of Refco’s biggest tricks. They used customer seg funds to hide a $400 million loss which they did not list when the firm went public. Like Refco, MF was one of the CME Group's top brokers until it made a $6.3 billion bet on European sovereign debt that went bad and used the customers' funds to margin the positions.

Trustee James Giddens
MF Global held a full range of memberships both in New York and in Chicago. Many of these seats were used by MF Global floor personnel and some were bought for clearing status. On Monday it was revealed MF Global trustee Giddens sold a collection of memberships on behalf of the now bankrupt MF Global 12% lower than the last sale prices for each type of membership. In order to accommodate the large mass sale, the seats were sold below recent selling prices. One full membership that allows the holder to be able to trade any listed contract on the CME sold for $350,000, according to the postings on the floor. A spokesman for Giddens said he “can't talk about the details" concerning the exchange memberships, and the CME declined to comment on the membership sales.

Over for some, not for others
While the seats are one of the last assets owned by MF, the sale did not go unnoticed. While some seats sold for 12% to 13% lower than their last sale price, one membership that was used to trade emerging markets that two days earlier sold for $18,500 went for $8,000. Many traders who bought seats recently complained about the discounted seat sales. And while most of the customer segregated funds have been recovered (most got back 85%) the money that was used for the cash markets has not. In the end Corzine's use of customer seg funds and the damage it caused should be treated in the same manner Russ Wasendorf of PFG was. He should go to jail.

Our view: Asia closed mostly higher and Europe is down slightly. With so much Fed speak going on, we think things will be slow for the first part of the day. We think all the talk about reducing the Fed’s bond buying program is just that, talk. The economy is still slowing and they can't afford a recession. That said, so far there do not seem to be many negatives coming out of the Fed the last few days. Let’s face it, the S&P will give small glimmers on the downside and bigger moves up. The real money trade is the long side. It’s not just the U.S. that is seeing a big push up -- the FTSE hit a 12-year high yesterday and the DAX is up over 1,000 points in the last month. Our view? We think higher, but that doesn't mean that there won't be some type of head fake. As always, keep an eye on the 10-handle rule and please use stops when trading futures.

• It’s 7:15 a.m. and the ESM is trading 1669.25, up 3.75 handles; crude is down 15 cents at 96.03; and the euro is up 24 pips at 1.2927.

• In Asia, 7 out of 11 markets closed higher ( Shanghai Comp. -0.12%, Hang Seng -0.45%, Nikkei +1.60%).

• In Europe, 7 out of 12 markets are trading lower (CAC -0.15%, DAX -0.03%).

• Today’s headline: “S&P Futures Seen Higher Ahead of Fed Announcement”

• Total volume: 1.69mil ESM and 7.5k SPM

• Economic calendar: MBA purchase applications, existing homes sales, Ben Bernanke speaks to Congress, EIA petroleum status report (API), Richard Fisher speaks and the FOMC minutes at 1:00

• Fair value: S&P +2.74, NASDAQ +8.75

• MrTopStep Closing Print Video:https://mr-topstep.com/index.php/multimedia/latest-you-tube-videos/danny-riley-closing-print/video/latest/closing-print-5-21-2013

Danny Riley is a 34-year veteran of the trading floor. He has helped run one of the largest S&P desks on the floor of the CME Group since 1985.
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DISCLAIMER: The information and data in the above report were obtained from sources considered reliable. Opinions, market data, and recommendations are subject to change at any time. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any commodities or securities. {jathumbnailoff}