The head of the firm that reportedly had been in negotiations to purchase MF Global before an apparent shortfall in MF Global’s segregated funds scrapped the deal, wants no part of the MF Global accounts being bulk transferred to numerous futures commission merchants (FCMs).
Thomas Peterffy founder and CEO of Interactive Brokers would not comment on reports that his firm was negotiating an acquisition of MF Global but did say that Interactive Brokers and MF Global for several months had been negotiating a technology service agreement. Peterffy says, “There is a big difference in having a substantial amount of time and putting accounts onto our technology in an organized manner vs. taking in a bunch of accounts where you have no idea how much money these accounts made or lost since last Friday.”
The two firms were working on a deal that would have allowed MF Global to access IB technology to streamline their operations. "They had a problem in the sense that they had a bunch of different systems and needed close to 3,000 people to do the work that maybe 1,000 people could do,” Peterffy says, while adding that his firm had also been accumulating MF Global stock prior to the controversy.
Peterffy says that those firms taking on MF Global accounts are exposing themselves to a great deal of risk. “I don’t understand how anyone has the guts to do this. I am just stunned because these accounts can affect their existing accounts. We just didn’t think it would be prudent on our part to expose either ourselves or our customers to the inherent risks,” Peterffy adds.
He says the entire process will takes months to resolve and will likely spur many lawsuits.
Peterffy says that due to the large size of MF Global, it would have been better to simply liquidate the accounts rather than trying to transfer them. “In the case of a smaller FCM I can see how that would work, however, in this situation the account holders would have been better off if all the positions were liquidated on Monday morning. Everybody would have known were they were standing and they could have gone to other brokers to open an account and reestablish their positions,” he says.