MF Global crisis chills markets

Traders buy and sell wheat futures in the trading pit at the Kansas City Board of Trade in September 2010. (Tammy Ljungblad/Courtesy Kansas City Star)

The CME Group, which runs some of the largest commodities exchanges in the country, said that trading volume dropped significantly in December 2011 compared to the year before and  analysts said MF Global's collapse may be to blame.

We reported on the uncertainty in the commodities markets thanks to MF Global last week.

After the commodities trading firm declared bankruptcy on Oct. 31, 2011, regulators found the company couldn't account for $1.2 billion of customer funds it had been holding. Many Midwest farmers that used MF Global to broker trades are still out thousands of dollars, which has made many investors scared that their assets aren't safe in the commodities markets.

Though many factors contribute to an exchange's trading volume, some analysts say that the MF Global mess has had a chilling affect on commodities trading, according to Reuters.

"People are just trading less given the environment," Rich Repetto, an observer of agricultural markets, told Reuters' Tom Polansek and Ann Saphir. "MF Global, you can't say it's not having an impact. It's not good for the industry."

As the inquiry into what went wrong at MF Global heats up, many in the industry are looking at the exchanges to make things right. Harold Bradley, the former executive at the Kansas City Board of Trade I talked to for last week's story said they're supposed to be the first line of defense for people who trade on the markets.

The MF Global mess is “an attack on the very essential function provided by central clearing organizations and exchanges in this country,” Bradley told me.

It looks as if some investors are already fighting back.