Archives: MF Global

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CFTC Approves New NFA Rules To Protect Customer Funds Held by FCMs: Corzine Rule Approved; Alternative Method Dead for Foreign Futures Seg Account

On July 13th, the CFTC approved new financial rules submitted by the NFA in a May 29th petition (available here). These new rules are intended to strengthen the protection of customer funds held by a futures commission merchant ("FCM"). The following are key highlights of the new rules. 1) Increased Protections for Foreign Futures and Options … Continue Reading

A Lesson From MF Global: Trading Foreign Futures? Ask for FCM to Use Net Liquidating Equity Method

For better or worse, it turns out that market failures tend to be the best teachers. Case in point…The trading of non-U.S. futures contract through a U.S. futures commission merchant. Here is a selection from the April 24th Report from the MF Global Trustee to the Senate Banking Committee (available here): Under current rules, FCMs … Continue Reading

CFTC Files a General Creditor Claim in MF Global Liquidation

You just don’t see this everyday, so we thought that we would point it out to you. On June 1st, the CFTC filed a Proof of Claim (available here) in the MF Global, Inc. SIPA liquidation. The claim was filed on a "contingent, unliquidated" basis, which essentially means – I may be a creditor someday and, if … Continue Reading

MF Global: Treatment of Repurchase Agreements in the SIPC Order GUEST COLUMN BY TODD ZEREGA

GUEST COLUMN BY TODD ZEREGA, PARTNER AT REED SMITH LLP As reported on other TSR postings, on October 31, 2011 SIPC filed a compliant seeking the appointment of a Trustee to commence the liquidation of MF Global Inc. under the Securities Investor Protection Act. On the same day Judge Engelmayer entered an order (the “Order”) granting the … Continue Reading

MF Global: CME to Provide $300 Million Guarantee to SIPC Trustee To Expedite Release of Futures Customer Property

On November 11th, the CME announced that it will provide $300 million to the SIPC Trustee to help facilitate the release of customer-segregated funds and frozen cash balances. Specifically, CME will provide a $250 million financial guarantee to the Trustee, in order to provide the Trustee with latitude to make an immediate, interim distribution of cash to … Continue Reading

MF Global: Statement on Claims Process

The SIPC Trustee’s counsel issued a statement in respect of the claims process. Here are the highlights: 1) The Trustee is working on an expedited claims process. Once established, former securities and commodities customers will need to submit a claim in order to obtain their property. 2) Distributions of customer property may be made from … Continue Reading

Your Initial Margin Is Only As Safe Your FCM’s Risk Management Program

As has been widely reported, many customers of MF Global have had their futures positions and a portion of the related initial margin transferred to accounts at a new futures commission merchant. These transfers were undertaken as part of a bulk transfer coordinated by the Trustee in the SIPC proceeding. As emphasized, however, not all of the  initial … Continue Reading

MF Global: The OCC Reports That It Has Liquidated Customer’s Listed Equity Options Contracts

On November 8th, the Options Clearing Corporation confirmed that it has been liquidating listed stock options held by MF Global’s customers. Liquidations have been occurring since last Tuesday, according to the OCC’s November 8th press release that is available here. The SIPC Trustee has not, to our knowledge, confirmed that the listed equity options have … Continue Reading

MF Global: Update for Securities Account Holders

In a November 7th statement, the Trustee indicated that: [W]e have identified approximately 400 security accounts that were active at MF Global and we are attempting to find brokers where those accounts can be bulk transferred back to customers. To the extent that accounts are not transferred, the Trustee will be establishing a claims process, … Continue Reading

MF Global: Trustee Issues Progress Report as of November 7th

On November 7th, the SIPC Trustee for MF Global issued a progress report on the status of the proceeding.  At a high level, Futures Accounts: As of today, approximate 17,000 futures customer account positions and $1.5 billion in futures customer account funds have been transferred to other futures commission merchants. Securities Accounts: The Trustee has … Continue Reading

MF Global: Clearinghouse Contacts For Questions About Status of Futures Positions

U.S. derivatives clearinghouses, CME Clearing, ICE Clear US, The Clearing Corporation, KCBOT Clearing Corp., MGEX, NYSE Liffe US and The Options Clearing Corporation are coordinating efforts to effectuate the bulk transfer of positions held by customers of failed FCM MF Global. According to a November 4th press release from the CME, the clearinghouses will notify … Continue Reading
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