As MF Global Falls, Traders Get Sent Home Early

On most weekday mornings, day trader John Woods is trying to grind out gains in the natural gas pits on the floor of the New York Mercantile Exchange.

On Monday, before lunch time, the president of JJ Woods Associates was back on the ferry to New Jersey. His trading day ended before it began by the bankruptcy of MF Global Holdings Ltd. (MF).

"We came, and we were told we can't execute our customer business, we can't trade our own accounts, and we're basically told to just go home," said Woods, a veteran floor trader who had used MF Global as his clearinghouse.

Woods is just one of the many traders across the U.S. watching a day of trading wash by after MF Global, one of the world's biggest commodity and derivatives brokers, was barred from major commodities and derivatives exchanges.

MF Global traders in Chicago and New York learned after arriving for work Monday they wouldn't be permitted to trade, with some having their keycards de-activated as they left the Chicago floor. Also many traders, like Woods, were prevented from trading because they use MF Global as a clearinghouse to post margins and execute other operational details.

Rumors had been swirling about MF Global for most of the past week, but when Woods awoke at 5 a.m. this morning at his home in Fair Haven, N.J., and turned on his computer, everything seemed normal. He traveled to lower Manhattan as he has most mornings for the past twenty-five years.

A little before 9 o'clock he had made it to the Nymex. On the floor of the exchange, rumors were flying.

"I come in, I say good morning to the boys, and at that point it was pretty sketchy, nobody new what was going on," he said.

Minutes later a representative from his clearinghouse, an affiliate of MF Global, explained that Woods and anyone else whose trades were processed by MF Global wouldn't be able to trade. The six associates at JJ Woods, who had arrived an hour earlier to talk with clients and plot their trading days, wouldn't be able to access the market until they found another clearinghouse.

The clearing representative told him: "'Here's the deal, you can't execute customer orders, you can't trade for your own account'," he said. "I have six guys up there. It basically handcuffed you."

"A lot of the guys were pissed," he said later as he sat in the ferry heading home. He had closed out his positions for the weekend, so he didn't have to worry about the market moving against him. But he was still disappointed as a day to trade slipped away.

"You trade to make money everyday, and these people are prohibiting you from making a living every day, without a warning. It's putting a crimp into the market," Woods said.

The affable floor veteran couldn't resist a bit of gallows humor, and was thinking about what he'll be telling his kids back in New Jersey. He'd be able to watch four of his younger children march through town in their school Halloween parades. Three are dressed as sports fanatics; one is dressed up as a hobo.

"My kids are going to ask, 'Did you make any money today money today, Daddy?'" he imagined. "No. That candy is for dinner tonight," he said with a dry laugh.

-By Jerry A. DiColo, Dow Jones Newswires; 212-416-2155; jerry.dicolo@dowjones.com

--Dan Strumpf and Ian Berry contributed to this report.

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