During the past 40 years — Futures marks its 40th birthday this month, which we plan on celebrating with special articles all year long — the industry has gone through dramatic changes. The days of using these markets only to hedge grains and livestock are long gone, and along the way, currencies, bonds and stocks — traded by hedgers and speculators alike — joined the commodities trading club. Options and ETFs also would join, and soon the entire world got into the business. Exchanges popped up in Europe and South America, Asia futures trading expanded beyond Japan. And the Germans launched an electronic exchange, pushing the floor-centric U.S. exchanges to jump on board. Today trading is a 24/7 business. Derivatives are traded by all levels of speculators, fund managers, investment banks and corporations. Even OPEC uses the market, as do central banks. Read the rest of this entry »
Better late than never is how the Commodity Customer Coalitions (CCC) responded to the Commodity Futures Trading Commission’s brief, filed on Wednesday Jan. 18, clearly stating that former MF Global Inc. customers have priority over all other claimants. Read the rest of this entry »
The days of outrageous Wall Street bonuses may be limited, depending on your definition of outrageous, of course. A recent Bloomberg story reported that Morgan Stanley, the owner of the world’s biggest brokerage, is capping cash bonuses at $125,000 and is deferring more compensation for senior level executives.
I’m a proud American but sometimes when watching Congress at work I wonder if our Founding Fathers were a bit daft. Case in point: The House Agriculture Committee hearings on the MF Global failure held Dec. 8. Between the redundant, silly, random and political ax grinding questions, it’s a wonder anything was learned. However: Read the rest of this entry »
As we now are weeks in the debacle following the bankruptcy of MF Global on Oct. 31, the latest casualty has just been announced. Already individual traders, commodity trading advisers and introducing brokers have felt sting, but now charitable foundations are beginning to as well. According to Reuters, CME Group, which has given $22 million to Chicago-area schools and charities over the past five years, has stopped making grants through its main foundation, citing the collapse of MF Global. Read the rest of this entry »
A frustrating aspect of the MF Global debacle is that as we get further away from the bankruptcy, the situation appears to be becoming less clear.
From our perspective and the perspective of our readers, the machinations of MF Global and its discredited leader Jon Corzine are less important than the ongoing effort to return customer money and addressing the structural breakdown in Futures regulation as it pertains to segregated funds.
“If this can happen to a highly regulated company like [MF Global], who can we trust in the future? Now speculators have three concerns: 1. The market, 2. Our own poor judgement and 3. To hope the clearing [firm] will not steal the accounts.” Futures reader
It’s time to wipe that smug smile off our face, the “our” meaning the futures industry. The bankruptcy of MF Global revealed a breakdown of an industry that has thrived knowing that customer margin was “safe” because of segregated fund protections. The sacrosanct institution of protecting margin at the exchange clearinghouse level while enforcing a strict segregation at the clearing firm has been tested throughout the years: Refco, Stotler, Lehman, et al. Sometimes it wasn’t as it should be: Volume Investors, Sentinel. But typically the funds were moved over with accounts and positions so clients would not have to worry about where their money was in addition to market risk. Read the rest of this entry »
The MF Global bankruptcy and liquidation procedure is getting stranger by the day. As those involved in figuring it out looked to take a Thanksgiving break — though MFGI customers still are looking to be made whole — an odd series of seemingly contradictory news items came out.
The good news is that the trustee located and began to bring in $1.3 billion in customer segregated funds. This may have prompted CME Group to increase the guarantee it made to the trustee to $550 million from $250 million. This is not an allocation but a “good faith” attempt by CME Group to expedite allocation of customer funds by the trustee. This followed the shocking news that nearly three weeks after the bankruptcy filing the trustee stated that the shortfall in customer funds could be twice as much as previously believed. Read the rest of this entry »
It has been nearly three weeks since MF Global Holdings Ltd. filed for bankruptcy and its futures commission merchant and broker/dealer went into liquidation and more than three weeks since we learned that they were in distress, yet we seem further away from an explanation as to what happened. Read the rest of this entry »
