Former MF Global customers were informed by the SIPA bankruptcy trustee that if their accounts were not part of the bulk transfer, they would be allowed to move their account without collateral if they found a willing futures commission merchant (FCM). All transfers must be completed by Friday Nov. 11 at 5 p.m. EST. After that point an “orderly liquidation” would begin.
This could create a big problem for those account holders as it is clear from a just released update from CME Group that not all the transfers have been verified. The update on the SIPA liquidation of MF Global web page appeared today.
CME Group stated in the release: “CME Group is committed to ensuring that all customers are treated fairly as CME Clearing works with the Trustee, is making substantial progress on verifications and continues to receive information from the 12 receiving clearing firms and other Derivatives Clearing Organizations (DCOs) to facilitate this process. However, due to the massive undertaking of processing data to verify 15,000 accounts for CME Clearing, ICE Clear US, The Clearing Corporation, KCBOT Clearing Corp., MGEX, NYSE Liffe US and The Options Clearing Corporation, as well as the unique circumstances of the MF Global bulk transfer process, the validation of each account’s collateral balance is taking longer than originally anticipated.”
The trustee update stated: “Commodity customer accounts that have not been transferred as part of the bulk transfer of accounts can be transferred if the account holder finds a Futures Commission Merchant willing to accept a transfer of the positions in the account without collateral. As required by law, account transfers must be complete by 5:00 pm EST on Friday, November 11, 2011, at which time the process of an orderly liquidation of non-transferred accounts will begin.”