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Credit Rating Cut for CME Group

The fall of MF Global has claimed another victim — this time it’s the credit rating of CME Group.

Ratings agency Standard and Poor’s cut its long-term issuer credit rating on CME Group to AA- from AA with a “negative” rating.

Chicago Mercantile Exchange (CME) traders
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Chicago Mercantile Exchange (CME) traders

In a press release, risks associated with the fall of MF Global were highlighted including funds dedicated towards restoring confidence in the futures markets.

Other risk factors of note included the CME’s growing over-the-counter clearing business and also, its margining techniques in other businesses, including credit default swaps .

The funds referenced include the recently created $100 million"Farmer Fund" and also, the $550 million guarantee designed to help the Securities Investor Protection Corp (SIPC) trustee get money back to MF Global clients.

Standard & Poor's credit analyst Charles Rauch writes:

"The potential financial impact of the MF Global guarantee and the Farmers Fund likely will not be a rating issue. But we believe that the ramifications of CME Group's support of its clearing members' customers expand the firm's long-standing mandate of guaranteeing trades among its clearing members."

In response, CME spokesperson Chris Grams says, “We’re pleased that our rating remains high, with only 21 companies in the S&P 500 achieving an AA- rating or better. We’re also pleased with the growth of our OTC business, which has now cleared more than $250 billion in U.S. customer volume ahead of the Dodd-Frank mandate.”

CME Group CEO Craig Donohue is scheduled to speak at a Credit Suisse Financial Services Forum Thursday in Florida.

Shares of CME Group fell following the bankruptcy of MF Global on October 31, 2011 but have since recovered (see graph above).

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