MF Global: Good news bad math

All the news out of the trustee on Tuesday was not good as it appears that customers who liquidated their accounts on Oct. 31 and later--during the period CME Group and other exchanges placed MF Global accounts on liquidation only--may not be eligible for the "cash only" liquidation process approved last week and already under way.

According to Susan Osmanski, compliance consultant for CCS Capital Management who is working with the Commodity Customer Coalition, trustee lawyers insist on leaving out those customers who liquidated positions on the 31st or later. So those customers will need to wait to make their claims. Osmanski attributes this on the trustee's lack of understanding as any trade completed would have had to be matched and cleared by the exchange. "Just because MF Global imploded doesn't mean the whole system is corrupted," she says. "These customers were acting prudently and professionally and now they are being punished."

She adds that because some trades executed Sunday night hit the books the following day that customers who closed out positions on Sunday Oct. 30 may also be affected.

It is unclear whether the addition of $1.3 billion in customer funds would immediately affect this group of customers.

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