The collapse of MF Global has spooked the market yet again as new details emerge in wake of the FCM’s bankruptcy filing.

Bullish traders have had a rough week, thinking that we had returned to a rocketship-style market that was welcomed by key levels in the S&P 500 and Dow Jones Industrial Average last week. Such is not the case, however.

The failure and bankruptcy of MF Global has caused the market to do an about face, with multiple indices and stocks heading lower on news of the FCM’s failure and that Europeans can’t work out a proper debt package.

It was revealed this week that MF Global had filed for bankruptcy; its $6.3 bet on European sovereign debt proved too big to handle.

As a result, MF Global did not properly separate its customer accounts and borrowed cash from those accounts to cover losses on its sovereign debt bet. The firm confirmed to regulators that over $700 million in customer funds had been misappropriated.

CME Group Chief Executive Craig Donahue confirmed on a conference call that MF Global had not properly segregated customer accounts.

“CME has determined that MF Global is not in compliance with CFTC and CME customer segregation requirements. While we are unable to determine the precise scope of the firm’s violation at this time, we are investigating the circumstances of the firm’s failure,” said Donahue.

Evidence of panic and fear was evident in the CBOE Volatility Index (VIX), which shot up over 18 percent on Tuesday to 35.4 whilst U.S. equities stumbled lower.