MF Global trustee reports 60% of futures collateral transferred

By seeking Court approval on an emergency basis, the Trustee, in coordination with the CFTC, SIPC, and the CME and other exchanges, has been able to transfer approximately 17,000 customer accounts with open commodities positions, along with approximately $1.55 billion in collateral, which is approximately 60% of the collateral that had been associated with these positions at the time of the bankruptcy. This Court-authorized bulk transfer was the maximum relief available under the law and the circumstances, and it averts mandatory liquidation of the transferred positions under governing CFTC rules.

MF Global Inc., by court order, is undergoing a liquidation process. MF Global Inc. is currently being wound down. The broker-dealer is not conducting business and will not be reorganized.

In order to protect their transferred positions, MF Global Inc. customers who have been transferred should consider posting collateral if that action is requested by the transferee Futures Commission Merchant (FCM). As an alternative, these former MF Global Inc. customers can request to have accounts liquidated.

The Trustee has begun an independent and thorough investigation. At this time, we can’t know how long the investigation will take or how long it will be before we are able to begin to return additional assets to customers. We do know there is an apparent shortfall at MF Global Inc. My obligations under the law are to reserve assets and identify and marshal other assets to maximize the estate in a manner that is fair to all customers.

The Trustee does not have the authority to transfer commodity accounts except in bulk, as granted by the Bankruptcy Court. If an individual’s account has not be transferred as part of the bulk transfer, that account can be transferred if the individual finds an FCM and transfers the account without collateral.

Additionally, we have identified approximately 400 security accounts that were active at MF Global and we are attempting to find brokers where those accounts can be bulk transferred back to customers.

To the extent that accounts are not transferred, the Trustee will be establishing a claims process, which will need to be approved by the Court, for the customers and creditors of MF Global Inc. consistent with his duties under SIPA to identify and marshal assets available to satisfy customer claims and to maximize the estate for all stakeholders in an orderly and fair process.

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