UPDATE: MF Global Moves To Reassure Customers As Shares Slide

MF Global Holdings Ltd. (MF) took steps to reassure its customers that the broker-dealer remains a safe place to do business, as the shadow over the company darkened Wednesday.

Major derivatives clearinghouses confirmed that New York-based MF Global remained in good standing and was able to meet its obligations, but several brokerage firms said that they were reconsidering their relationship with the troubled company, and investors continued to flee the stock.

Some MF Global employees also looked for chances to move to other firms, according to a person familiar with the matter.

"MF Global's financial position is strong and the firm remains a well-capitalized counterparty with a strong liquidity position," wrote Henri Steenkamp, MF Global's chief financial officer, in one of several notes sent to clients in recent days.

Monday, Moody's Investors Service cut its credit rating on MF Global to one notch above junk status, citing an increased appetite for risk-taking and exposure to European sovereign debt, a flashpoint for investor worry in recent months. A surprise quarterly loss reported Tuesday by MF Global sent shares tumbling 48%.

The pressure continued Wednesday, with the stock closing another 8.6% lower at $1.70 after reaching an all-time low of $1.07 during the session. The company has hired Evercore Partners Inc. (EVR) and at least one other bank to explore strategic options, The Wall Street Journal reported Wednesday.

Operators of derivatives clearinghouses, including CME Group Inc. (CME), IntercontinentalExchange Inc. (ICE) and NYSE Euronext (NYX), which collect trading collateral from member firms such as MF Global to ensure any customer losses can be adequately covered, said the company remained a member in good standing as of Wednesday morning. No change was seen to its status at Eurex, the derivatives market run by Deutsche Boerse AG (DB1.XE, DBOEF), according to a person familiar with the matter.

Any liquidity issues faced by MF Global could require the exchanges to guarantee trades made by the brokerage through their own clearing systems.

Meanwhile, MF Global stands to potentially lose customers and in some cases its own staff. One firm with U.S. trading operations said it began receiving resumes from MF Global traders on Wednesday.

Futures brokers that clear their customers' trades through MF Global were rattled by the dramatic deterioration in the company's valuation, and several said they were considering shifting their business elsewhere.

"We're actively reviewing the relationship," said one Chicago-based broker, who declined to be identified due to the sensitivity of the matter.

While the broker said his customers were unlikely to be affected by any further troubles confronted by MF Global, there is concern that a dry-up in cash flow or move into bankruptcy protection could mean that his firm doesn't get paid commissions that MF Global collects on the broker's behalf.

One oil-market trader who spoke on the condition that he wouldn't be identified said his firm had received requests for price quotes to take over trades in which MF Global was serving as the clearing firm, wanting to avoid complications with execution if MF Global's state deteriorates.

Still, the trader said, the positions were being offered at fair value--not a discount--and traders over all aren't highly worried about the matter. "The level of concern is not extreme, but it's not zero, either," the trader said.

One statement was sent by MF Global to customers Monday, following the downgrade from Moody's, according to persons familiar with the matter. Another notice followed MF Global's earnings report Tuesday. A person close to MF Global's business said the company had yet to see any client defections as of Wednesday morning.

Other firms continued to do business with MF Global as per normal Wednesday. "Nobody's come through and said 'don't trade with them,'" said a broker at a rival firm, speaking on the condition of anonymity.

-By Jacob Bunge, Dow Jones Newswires; 312-750-4117; jacob.bunge@dowjones.com

--Christian Berthelsen, Ryan Dezember and Tatyana Shumsky contributed to this article.

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