While U.S. customers of MF Global are still basically frozen out or on liquidation-only awaiting word from the bankruptcy judge and CME Group, MF Global’s designated self regulatory organization (DSRO), non-U.S. exchanges have begun liquidating positions after shuddering MF Global’s business.
Eurex Clearing announced today that it has successfully wound down its clearing member MF Global UK Limited (MF Global). According to Eurex, MF Global had entered Special Administration Regime on Monday, Oct, 31, as confirmed by its regulator, the Financial Services Authority (FSA).
On Nov. 1, Eurex Clearing terminated the clearing agreement with MF Global, triggering the liquidation of corresponding positions at Eurex Clearing. Eurex noted that the exposure of those positions had been covered by MF Global collateral and there was no need to draw on the Clearing Fund. The collateral backing those positions will be returned to MF Global UK Ltd., which is being administrated by accounting firm KPGM.
”The implemented safeguards of Eurex Clearing have again proven to be effective, and underline our high standards in risk management. In this critical situation," said Thomas Book, member of the Eurex Executive Board, responsible for clearing.
An interesting side note is that in August Eurex Clearing began offering its “Individual Clearing Model,” where non-clearing members of Eurex could have their capital segregated separately from their clearing firm. In this instance such a firm could have had their collateral separately segregated and could have moved it to another clearing member after the MF Global bankruptcy. However, a Eurex spokesman says that no entity that cleared MF Global took advantage of this model.
In Australia, Deloitte Partners were appointed voluntary administrators of MF Global Australian entities, including MF Global Australia Limited, MF Global Securities Australia Limited and Brokerone Pty Limited. The administrators have taken control of the companies and all of their operations.
Further ASX advised the administrators and the companies that all clearing and settlement activities have been suspended with effect from the appointment and the companies can not trade any ASX markets.
Administrator Chris Campbell said in a release, “We have taken control of the assets of the three companies and begun the task of assessing the positions of each, including their OTC derivative positions. “We are commencing a process to reconcile all client positions as at the date of appointment to determine monies owed to each client. This will also include the necessary close out of most, if not all client positions.”
In other ASX news, the Financial Times reported that trading resumed today in its agricultural and wool markets. Trading had been suspended in these markets on Tuesday due to the MF Global bankruptcy as MF Global accounted for a majority of the market share in these contracts according to the FT, including 80% of the wool contract.
On Monday NYSE.Liffe U.S. suspended access to its markets by MF Global and its customers. Earlier in the day they placed MF Global positions on “liquidation only.”