Trustee James Giddens announced the plan in court papers on Thursday, saying he would also seek to distribute as much as $50 million to customers who traded on foreign exchanges, and $35 million to certain customers who hold physical property such as gold bars.

Customers who trade on U.S. exchanges have already received payouts amounting to roughly $3.9 billion, or about 72 percent of the value of their accounts. The latest payouts, if approved by Judge Martin Glenn in U.S. Bankruptcy Court in Manhattan, would increase that recovery percentage to more than 80 percent, Giddens estimated.

The payouts would represent about a 10 percent payback for customers who trade on foreign exchanges, a group that has seen no recovery as of yet, Giddens said.

The broker-dealer's parent, MF Global Holdings Ltd, filed for bankruptcy on October 31 after revealing $6.3 billion in exposure to risky European sovereign debt.

An estimated $1.6 billion that went missing from customer accounts -- the result of improper use of those funds to cover corporate transactions, according to a Giddens report in February -- has been the subject of ongoing investigations from federal regulators. The company's former CEO, ex-New Jersey Governor Jon Corzine, resigned in November.

'AS QUICKLY AS POSSIBLE'

If approved at an April 12 court hearing, the payouts would be made "as quickly as possible," Giddens spokesman Kent Jarrell told Reuters on Thursday, but no specific time frame was given.

The latest proposed distributions would go out on a rolling basis, the trustee said in court papers -- a departure from previous payouts, which were made in bulk. This round would be paid out as customer claims are processed and validated, a procedure that remains ongoing, Giddens said.

It would also be contingent on customers agreeing to accept Giddens' determination on the validity of their claims, Jarrell said. Customers who object to those determinations would not be paid while their objections were pending, he explained.

The payouts would come mainly from about $1.4 billion the trustee has been holding in reserve in anticipation of claims against the broker-dealer from MF Global affiliates and other parties.

Giddens feels comfortable reducing that pot by the roughly $685 million sum of the three proposed transfers, Jarrell said.

"That's his judgment call, and that's a judgment he has made," Jarrell said.

One customer advocate said Giddens' willingness to part with a chunk of his reserve suggests that claims against the brokerage are meritless.

"It tells me these claims are what we thought they were -- totally illegitimate," said John Roe, spokesman for the Commodity Customer Coalition. "No one has a legitimate claim on customer property."

There would still be around $750 million in reserve, and foreign MF Global entities have asserted about $350 million in claims against the brokerage, Giddens said in court papers.

In the past, some customers, including the coalition, have objected to Giddens' proposed methods for distributing money to customers.

Roe does not see that happening with the latest plan.

"I can't really see how anyone could object to it," he said. "It's another eight-to-ten cents for clients."

The bankruptcy 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; Editing by Maureen Bavdek, Dave Zimmerman)

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