The largest U.S. grain trade group on Thursday said Congress and commodities regulators should adopt its recommendations to protect customer funds and restore market confidence after the collapse of giant broker MF Global.

The demise of MF Global has shaken the confidence of many futures market participants concerning the safety of segregated customer funds, the National Grain and Feed Association said in letters to the Senate and House Agriculture Committees and to the Commodity Futures Trading Commission.

We believe these preliminary recommendations are essential to begin reestablishing confidence among futures market participants and to help safeguard customer funds, NGFA said.

Up to $1.6 billion in supposedly safe segregated customer accounts at MF Global are still missing after the brokerage filed for bankruptcy on October 31, 2011. The bankruptcy was prompted by losing bets it made on European debt and other securities.

NGFA has a membership of more than a thousand companies representing grain facilities, food processors, biofuel makers and exporters.

NGFA members had hundreds of millions of dollars in segregated margin accounts and other deposits at MF Global as part of their normal daily business in trading agricultural futures and options to hedge cash market risk.

NGFA's recommendations included:

- Daily reporting of segregated fund investments and positions by futures commission merchants (FCMs).

- More detailed and frequent audits of FCM reports, including unannounced spot checks of FCMs.

- A rigorous review of FCM and broker-dealer capital requirements by CFTC

- Scrutiny by CFTC of the practice of double-counting such required capital when a firm operates as both an FCM and a broker-dealer.

- Specific signed and transparent documents from FCM executives when segregated customer funds are moved to non-customer accounts in order to assign accountability and to aid in establishing that fraudulent activity has occurred.

CME Group , the world's largest futures exchange, has been under fire since MF Global collapsed because it was seen as the first-line regulator. CME said this week it will require FCMs to report customer fund levels daily starting May 1.

NGFA said it plans to study more options to protect customer funds including the viability and costs associated with extending insurance coverage to commodities accounts, either privately provided or under the type of insurance program currently in place for securities accounts.

It plans to complete its evaluation and offer additional recommendations by early June.

(Reporting by Christine Stebbins; editing by Peter Bohan and Bob Burgdorfer)