The first payments have been made by the Financial Services Compensation Scheme to victims of MF Global.

The FSCS reported today that application forms had been sent out and £130,000 had so far been paid in compensation.

American firm MF Global went into special administration in November 2011 after revealing a £4bn exposure to European sovereign debt.

The firm was said to have broken rules over segregating and safeguarding clients’ money and an estimated £760m in customer cash is missing from accounts.

Forms started being sent in February to individual private clients then joint account holders and trust and corporate account holders. Over 4,000 forms have already been returned to the FSCS.

Customers who received a form are urged to return them as soon as possible. They must also agree their balances with administrators KPMG before any payments can be made.

A maximum of £50,000 can be paid out per customer in compensation.

Although the firm was an American company, the FSCS is making all payments in sterling, converting any US dollar balances provided by KPMG at the date the firm failed.

In March the FSCS issued an interim levy of £60m for the investment intermediary sector to cover the cost of failed firms such as Keydata and Arch Cru.

The largest proportion of the levy, some £27m, is estimated to be used for MF Global compensation.