Although the dust has yet to settle over MF Global’s collapse, there are already clear lessons for buy-side firms to absorb.
The received wisdom that no-one had ever lost money from an FCM going bust on the CME market is no longer true, and long standing assumptions need to be looked at with fresh eyes.
Clients of the futures, commodities and equities broker MF Global are still trying to recover funds and momentum, following the clearing broker’s bankruptcy filing on October 31 2011, in a situation that was reminiscent of the Lehman Brothers collapse of September 2008.
The big difference is the missing customer money, identified by the US court appointed administrator James Giddens as a “$1.6bn gap between the value of the Trustee’s estimate of potentially allowable commodities claims and the assets that are currently under the Trustee’s control”.
"In the futures market, which...