At a hearing today in U.S. Bankruptcy Court in Manhattan, lawyers for the CFTC said the trustee for the bankrupt broker- dealer may recover the shortfall.

MF Global’s trustee won permission to transfer 50,000 accounts where customers of the failed brokerage have 3 million positions and over $100 million at stake, saying the move will help avoid liquidations.

James Kobak, a lawyer for trustee James W. Giddens said the accounts, which are at CME Group Inc., will be transferred with 60 percent collateral, leaving 40 percent with the clearing organization. Asking for the transfer of segregated customer positions, he said he was acting on the advice of the CFTC.

“MF Global will have rights to that 40 percent, and there may be rights the exchange itself will assert,” Kobak said. He said the trustee is also seeking other exchanges like CME to transfer customer accounts. David Neier, a lawyer for IntercontinentalExchange Inc., said his client also has MF Global accounts at stake.

Accounts that aren’t transferred will be liquidated, in an orderly fashion, beginning Monday, Kobak said. If former MF Global customers’ accounts are transferred, they’ll be notified by the following day, and can transfer again if they’re not happy with their assignment, Kobak said.

The trustee, James Giddens, has said he froze 150,000 customer accounts, including 50,000 commodities accounts, on Oct. 31 at the broker-dealer once run by former Goldman Sachs Group Inc. executive Jon Corzine.

MF Global Holdings Ltd., the brokerage’s parent, filed for bankruptcy protection in Manhattan on Oct. 31 after making bets on European sovereign debt. Giddens is tasked with liquidating MF’s broker-dealer unit for the Securities Investor Protection Corp. to protect customer assets.

More than one firm would have to be found to take over the accounts, as none of the existing 125 futures commission merchants “would be willing and able to handle the variety of accounts” at MF Global, Giddens said, citing advice from CME Group Inc., which operates a derivatives exchange. The trustee is still looking for takers to accept all the accounts, his lawyer said in court today.

‘Over-Collateralized’

Separately, CME said today that MF Global’s customer accounts on the group’s exchanges are “substantially over- collateralized” at CME Clearing. The funds CME wanted transferred to futures merchants are segregated funds held by MF Global, it said in a statement today.

MF Global’s deposits of segregated customer funds at the CME totaled $2.5 billion, the trustee said. Collateral for customer segregated funds at the “clearing level” is about $1.5 billion, or about 60 percent, he said.

Referring to an “apparent shortfall” in segregated customer funds at the broker-dealer, CME said the funds may have been transferred after a CME audit of the funds, in violation of regulatory rules.

“It now appears that the firm made subsequent transfers of customer segregated funds in a manner that may have been designed to avoid detection,” as the transactions weren’t reported to regulators until Oct. 31, it said.

Lehman Brothers

Stephen Harbeck, president of the Securities Investor Protection Corp., said transferring the accounts is a priority. He compared the situation with the liquidation of Lehman Brothers Holdings Inc.’s brokerage.

Barclays Plc, based in London, took over accounts from Lehman, giving 72,000 brokerage customers access to $40 billion in frozen assets. With MF Global, discrepancies in funds used to back futures trades sent Interactive Brokers Group Inc. fleeing from a potential acquisition, according to a board member at the Greenwich, Connecticut, firm.

“With Lehman, the day SIPC filed the liquidation proceeding, we executed a transfer agreement with Barclays,” Harbeck said. “This time it won’t be that fast.”

Updates on Giddens’s progress will appear on a website set up for the purpose, mfglobaltrustee.com, the trustee said.

The case is In re MF Global Inc., 11-ap-2790, U.S. Bankruptcy Court, Southern District of New York (Manhattan).