(Updated 1:30 p.m.)
(Crain's) ? CME Group Inc. has asked brokers who have taken over customer accounts from MF Global Holdings Ltd., which filed for bankruptcy protection on Oct. 31, to not disburse any of the money until at least the close of business on Tuesday as it looks to verify the amounts involved.
CME Group , the biggest operator of U.S. futures exchanges, has directed members to delay the distribution of transferred funds and proceeds of the liquidation of any transferred positions until the calculation is over.
There have been conflicting reports about the whereabouts of $633 million of missing customer money, whose disappearance derailed MF Global 's effort to quickly sell a variety of assets.
"We will notify firms promptly as customers' accounts are verified and the hold is lifted," the CME said.
The calculation is expected to be completed by the close of business on Tuesday, it said.
The bankruptcy trustee in the case Monday morning sought and received approval to return funds up to $250,000 without court approval that are misdirected to the estate, such as in the case of money wired to one of the accounts that is no longer with MF Global. While the trustee, James Giddens, will still investigate the requests, he won?t have to seek the judge?s approval. He will still need court approval for amounts of more than $250,000.
The trustee said in his motion requesting the streamlined process that he knew from experience in another Securities Investor Protection Corp. liquidation case, that of Lehman Brothers Inc., that it would be helpful to have a faster means of returning those funds. (He was granted the same authority in Lehman). So far in the case of Lehman, which was placed under liquidation orders begun in 2008, the trustee has returned $569 million in misdirected funds.
He said he has already started receiving requests for the return of funds that were misdirected in the MF Global case.
Separately, the trustee also said in a news release that so far, about 17,000 former MF Global customer account positions and $1.5 billion in related customer funds have been transferred to other clearing firms from MF Global.
Also, CME Group and IntercontinentalExchange Inc moved over the weekend to limit the fallout from the MF Global bankruptcy on futures markets by lowering margin requirements on some accounts.
"The exchanges have lowered the margins to help the transition until the cash arrives," said Jonathan Barratt, managing director at Commodity Broking Services in Sydney.
"While it's a prudent thing that the exchanges are allowing people to transfer the positions away from MF Global , funds should also be transferred as well, instead of having people pay the margins twice."
Traders had worried that a rush to cover margin requirements on MF Global accounts transferred to other brokers could lead to heightened market volatility.
There was little evidence of this on markets for CME futures like U.S. crude or wheat on Monday.
Volumes on ASX Ltd's Australian grain futures leapt on Monday, after slowing to a trickle last week, with January wheat trading a record quantity.
The ratio of the initial margin, paid when an investor has to meet a margin call, has been changed to zero versus the maintenance margin, CME said.
Initial margins are higher than maintenance margins to provide an additional buffer against losses.
For example, the maintenance margin on 2011 Nymex crude oil contracts is $6,000, and the initial margin is $8,100, according to the CME website.
The margin reduction for MF Global clients is aimed at providing "market relief to customers whose accounts have been disrupted by this event," the Chicago-based CME said in a statement on Nov. 5.
"The margins differed according to products," Jeremy Hughes, a Singapore-based spokesman at CME , said in an e-mail response to queries.
IntercontinentalExchange Inc., which operates the London-based ICE Futures Europe, said in a statement that ICE Futures U.S. is temporarily lowering the initial margin rate for speculative accounts to a level equal to the maintenance margin rate for all contracts.
"This action is being taken to mute the impact of the transfer of accounts from MF Global Inc. to other clearing members," the exchange said.
The collapse of MF Global comes at a time when the Commodity Futures Trading Commission, Securities and Exchange Commission and bank regulators are writing some 400 new rules required by last year's Dodd-Frank financial reform law.
The changes heightened futures firms' concern of an increase in operational costs and limits on how they invest customer funds for their own benefit.
(Crain's senior reporter Lynne Marek and Reuters contributed.)
? ?(Note: Your first name and last initial will appear with your remarks.)
magic cube slaughterhouse cypher last man standing gary johnson gary johnson jim thorpe pa
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.