WASHINGTON (Reuters)—The trustee overseeing the liquidation of MF Global Holdings Ltd.'s failed futures brokerage told a U.S. Senate panel on Wednesday that customers could receive more than 90% of their funds.

While it may take months or years of legal battles to recoup more of the $1.6 billion in missing money, the comments from James Giddens added to months of growing optimism that thousands of farmers and futures traders who had feared a devastating financial blow may yet be made whole.

"If we're successful in pending litigations, I think we're comfortable saying that additional distributions should certainly be in the 90% range," Mr. Giddens said. Customer bankruptcy claims have been trading in the secondary market at more than 90 cents on the dollar for months.

The trustee winding down MF Global's parent company, former FBI Director Louis Freeh, was even more optimistic, reiterating his prediction that all customer cash would be fully returned. He said in prepared testimony that his comments were based on public information, not new insight.

Mr. Giddens said he expects soon to increase the distribution to customers who traded on U.S. exchanges to 80%, up from 72% now. "We very much would like to pay every customer 100%, however, it will be a time consuming, difficult and uphill battle," he told senators.

While the final tally is unlikely to be known for years, the hunt for missing MF Global funds has drawn renewed scrutiny after the collapse last month of smaller broker Peregrine Financial Group Inc. as its founder confessed to a two-decade fraud that left a more than $200 million hole in customer accounts.

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That scandal has provoked renewed political outrage over regulators' ability to protect customer cash, and both collapses were the subject of the Senate Agriculture Committee hearing on how to improve the security and oversight of futures markets.

Officials who testified appeared no nearer to agreeing which of a half-dozen new measures to improve futures broker security might move forward.

"The failure of two futures brokerages in a nine-month time span has deeply wounded investor confidence in the futures markets," said Chairman Debbie Stabenow.

"We have heard from farmers and businesses who, after MF Global collapsed, opened accounts at Peregrine. For these folks, lightning really does strike twice in the same place, and they rightfully want to know why. I want to know why."

The fact that Mr. Giddens has had success in finding and recovering much of the missing money may temper criticism of former MF Global Chief Executive Jon Corzine, who had been scrambling to meet margin calls on bad European debt trades in the brokerage's final days.

When asked by lawmakers whether or not Mr. Corzine knew about the transfer of customer money, Mr. Giddens said he felt there was evidence pointing to the brokerage's executive suite.

"I think the preponderance of the evidence indicates that management, senior management at MF Global was aware of the liquidity crisis and was aware that customer funds toward the end were being utilized to cover other costs in the firm," Mr. Giddens said.

A spokesman for Mr. Corzine, Steven Goldberg, said the former U.S. senator and governor of New Jersey stood by earlier Congressional testimony that "he was not aware of the misuse of customer funds."

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Mr. Giddens in a June report said he believed there were valid claims against Mr. Corzine, Chief Financial Officer Henri Steenkamp and others for breach of fiduciary duty and negligence.

But in Wednesday's testimony, Mr. Giddens said he will forgo filing such claims himself in favor of assisting a class of former MF Global customers who have asserted civil claims.

Mr. Giddens said any money generated from the lawsuits would be funneled back to the MF Global Inc estate and distributed to customers.

Despite the optimism for MF Global customers, Peregrine customers face a much steeper battle. Peregrine trustee Ira Bodenstein told lawmakers on Wednesday he could not provide a timetable for returning customer money.

"We're working diligently right now to verify the customer balances and customer segregated funds," he said.

Peregrine customer claims are trading at only 20 to 22 cents on the dollar, reflecting the uncertainty.

Lawmakers on both sides of the aisle raised questions about the regulatory structure that missed red flags at both brokerages, and whether or not the decades-old model of letting the industry police itself is out of date.

Officials and industry representatives promoted regulatory reforms ranging from an insurance-like fund to tougher penalties or changes to the bankruptcy code.

Mr. Giddens said an insurance fund modeled after the securities industry's Securities Investor Protection Corp. might have covered about 78% of MF Global customers after the bankruptcy.

But officials from exchange operator CME Group—which was MF Global's functional regulator and has advocated using its clearing house to safeguard customer funds—said creating such a fund was not as easy as it looked.

"Ask the folks that were investing with Mr. Madoff when he took $50 billion and SIPC gave them $2.5 billion in return," CME President Terrence Duffy said, referring to infamous Ponzi schemer Bernard Madoff.