UPDATE: Exchanges Transfer Some MF Customer Business To Other Firms
November 04 2011 - 5:11PM
Dow Jones News
Exchanges on Friday shifted customer accounts and trading
collateral previously overseen by MF Global Holdings Ltd. (MFGLQ)
to other clearing firms, part of a worldwide effort to mop up a
mess left by the firm's slide into bankruptcy this week.
About 5,300 customer accounts and more than $410 million in
trading collateral were transferred to other trade-clearing firms
Thursday, according to exchange operator CME Group Inc. (CME),
which handled the bulk of MF Global's U.S. business.
IntercontinentalExchange Inc. (ICE) and New York Portfolio
Clearing, which handles trades on NYSE Euronext's U.S. futures
platform, also moved former clients of MF Global in recent days,
the firms reported Friday.
The migration aims to free up customers who had trading
positions frozen and margin money trapped by MF Global's collapse
on Monday. MF Global's bankruptcy filing also revealed a shortfall
in client funds held on deposit, estimated at about $633 million.
The discrepancy in client assets, which by law are to remain
separate from a clearing firm's own funds, has held up the process
of transferring some MF Global clients elsewhere.
For this reason, only about 60% of the collateral posted by
floor traders and hedge funds and managed by MF Global is being
dispersed as part of the transfer.
"CME Clearing continues to hold MF Global proprietary and
customer collateral that will be distributed upon instructions from
the Trustee and the bankruptcy court," CME officials said in a
statement Friday.
The court-appointed trustee overseeing the liquidation of MF
Global has authorized CME to transfer $1.45 billion of the $2.5
billion in collateral held against trades on CME's derivatives
markets, and as of midday Friday CME had shifted $410 million of
that figure.
IntercontinentalExchange in the U.S. was affecting similar
large-scale transfers of client business to several firms on
Friday, after completing a similar, smaller-scale effort for its
Canadian market. On its larger U.K. platform, ICE for several days
has been transferring individual customer accounts to other
clearing firms.
New York Portfolio Clearing reported that it had completed the
transfer of all MF Global clients to rival firms on Friday.
-By Jacob Bunge, Dow Jones Newswires; 312-750-4117;
jacob.bunge@dowjones.com
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