IntercontinentalExchange Inc on Thursday added its voice to an anguished chorus of commodity traders calling for MF Global's bankruptcy court to release billions of dollars in cash frozen in their accounts.

Unable to say when the search for some $600 million of missing customer funds might conclude, the trustee overseeing the liquidation of MF's brokerage moved to deflect mounting pressure to give back more of that collateral, saying he could not yet legally release individuals' funds.

But customer payouts may not be far off. In a statement released Thursday evening, a lawyer for Trustee James Giddens said his legal team will seek court approval on an expedited claim submission process for customers.

Assuming it is approved by the bankruptcy court, payouts may begin in increments as the trustee continues the process of making sure all of the brokerage's customer assets are accounted for, according to the statement.

As traders, exchanges and lawyers sought to untangle accounts, the U.S. futures regulator confirmed it had begun a formal probe into the collapse of the brokerage once run by Jon Corzine, a Wall Street legend and former New Jersey governor.

The firm's bad bets on European debt triggered a crisis of confidence in one of the most active commodity brokers in the world.

The Commodity Futures Trading Commission investigation follows the discovery that some $600 million was missing from segregated accounts, customer funds that are meant to be held separate from the broker's own money.

The CFTC also said it would do a sweeping audit of all clearing futures commission merchants to ensure customer funds were properly segregated.

The search for MF Global funds has delayed and complicated the process of returning funds on account to the firm's customers, whose cash has been frozen for almost two weeks. While clients with open trading positions were transferred to new brokers, those holding only cash have not seen any funds.

There are growing concerns that regulators may be unable to find the missing customer funds, at least in a state where it can be paid back to creditors.

Our forensic investigators have been there since last week, and nothing we have found so far causes us to think anything other than there is an apparent shortfall at MF, said Kent Jarrell, a spokesman for Giddens.

Giddens said on Thursday he was not able to authorize the transfer of individual accounts until all claims had been made.

If customers still have shortfalls after the claims process, they would be forced to join the bankruptcy queue as unsecured creditors, he said in a statement.

That will infuriate commodity traders who argue that, since only about 11 percent of the estimated $5.5 billion in segregated funds is missing, the court should be able to release another tranche. They estimate that just over half has been dispersed in the form of collateral on open trades.

In a letter to Manhattan bankruptcy Judge Martin Glenn, ICE warned of the systemic implications and moral hazard of rewarding customers who had held onto their positions -- and are now trading with new brokers -- while penalizing those who acted quickly and responsibly to reduce their exposure.

We therefore urge the Court to immediately permit the release of as much of the cash balance as possible that remains in the accounts of these liquidating and transferring customers at MF Global, ICE Futures US President Thomas Farley and ICE Clear U.S. President Thomas Hammond wrote in the letter.

CFTC INVESTIGATES

The CFTC, which normally does not publicly confirm such probes, said it was in the public interest to announce that its enforcement division began an investigation on October 31.

This isn't just a lost-and-found inquiry; it's a full-on effort to get to the bottom of what appears to be a massive hide-and-seek ploy, Bart Chilton, a Democratic commissioner, told Reuters.

The announcement on Thursday was largely symbolic. The CFTC said it does not intend to provide further updates. The FBI also has shown a preliminary interest in regulatory probes looking into the missing funds.

The CFTC said Jill Sommers, a Republican commissioner, would take the lead on matters related to MF Global. She replaces Chairman Gary Gensler who has rescued himself from the investigation.

Separately, the CFTC also announced it will review all futures commission merchants regarding segregated funds.

Regulators and self-regulatory groups frequently review financial records of those firms, but sweeping checks like the one being undertaken now are not typical.

We have heard from a number of concerned customers with regard to 'How do I know my FCM is solvent or how do I know my customer funds are protected?' Sommers said in an interview.

This is just common sense to make sure that everybody can feel confident in their clearing members to know that segregated funds are being properly maintained, she said.

POSITIONS, BUT NOT CASH

Giddens set up a bulk transfer of about 17,000 commodities accounts earlier this month, including much of the collateral required to back those trades.

But the court has denied claims by former clients to return cash trapped in their accounts, leaving them with no trading account and no cash to fund new positions.

Angry customers have warned that traders, brokers and smaller hedge funds risk going out of business if they cannot access their money. Unlike retail banks or in equities, no government agency stands behind commodity accounts or trades.

James Koutoulas, chief executive of Typhon Capital Management in Chicago, has gathered a loose coalition of around 1,200 MF Global customers who are also frozen out of their cash. As much as $55 million of his firm's money is inaccessible.

Being tied up for even an hour is an eternity in these markets. It's now been more than a week, said Koutoulas, who is also a securities lawyer.

We are petitioning the court for the release of 85 percent of the funds and to either remove the trustee or move him to a flat fee so he's motivated to get this resolved as quickly as possible, said Koutoulas.

It is unclear just how much cash is still frozen in MF Global's segregated customer accounts, which the CME Group estimated had a requirement of some $5.5 billion when it filed for bankruptcy on October 31. Regulators have said some 11 percent of that, or more than $600 million, is missing.

The CME Group has confirmed that about $1.5 billion of the $2.5 billion in CME-related segregated trading accounts at MF Global had been transferred out with those open trades, in theory leaving about $1 billion. ICE said on Thursday that half the deposits held for ICE Clear had been transferred, but it did not give any figures for total or frozen funds.

The bankruptcy case is In re MF Global Holdings Ltd, U.S. Bankruptcy Court, Southern District of New York, No. 11-15059.

The brokerage liquidation is In re MF Global Inc, in the same court, No. 11-2790.

(Reporting by Nick Brown; additional reporting by David Sheppard; Editing by Lisa Von Ahn, Jonathan Leff, Jim Marshall David Gregorio and Andre Grenon)