Wednesday, February 8, 2012

S&P Downgrades CME Group to AA- Over MFG Risk

After threatening to downgrade the US again in the next 6-24 months earlier today, S&P tonight downgraded the CME Group from AA to AA-, outlook negative, over concerns from MFG.
Our question is what would the CME's rating be if the CME had actually back-stopped MFG clients using their $8 Billion client guarantee fund?

CME Group Inc faces legal, regulatory and reputational damage from the failure of MF Global, Standard & Poor's said on Wednesday as it lowered the exchange operator's rating.

The downgrade is the latest blow for CME from MF Global, widening the impact of the collapse that shook confidence in futures markets and revealed hundreds of millions of dollars were missing from clients' accounts at the brokerage.
Credit-rating agency S&P warned CME's grade could drop again due to the bankruptcy.
"We could lower the rating on CME Group if legal and reputational issues take a long-term toll on its franchise and financial positions," S&P said.
CME, the world's biggest futures exchange operator, served as a primary regulator of MF Global, and the brokerage was one of the top facilitators of trades in CME's futures and options markets.
S&P lowered the long-term issuer credit rating for the company to "AA-" from "AA". The agency affirmed a short-term "A-1+" rating for the company.
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