MF Global Spreads has ceased to be

actually .. just to put a bit of fact into this... it is the well run companies that pay for the compensation schemes offered by the FSCS not the government. Readers might remember earlier in the year when all the small firm (us included) suddenly got huge bills from the FSA for the FSCS compensation payments for a company called Key Data Systems (which we had never heard of).

Oddly enough it meant that the small brokers/spread betting/cfd companies paid out far more on one compensation claim than all the fines imposed on the banks by the rgulators or politicians in the UK for the chaos of 2007/09 !

those clients with money over and above the FSCS will probably get nothing. in any case I understand that the shortfall is in the US not the UK.

Simon

If that's the case why aren't the supposedly reputable companies doing more about it? Theres plenty of dodgy companies like Montague Pitmann that could be spotted with even the most basic form of investigation long before they go bust yet the industry does nothing and permits a free for all.

What did the industry do when it discovered the virtual dealer plugin? Kick up a fuss, warn consumers? No they bought it and hoped they wouldn't get caught.
 
Those with client money tied up with MF Global in Administration have been notified by KPMG that funds have now started to be reclaimed from third parties and an Interim Dividend is intended to be paid - but not until well into next year. Apparently clients will be required to prove their debt up to 30th April 2012 with claim forms being sent out shortly. Interim payments are then due to be made within 2 months of that date. I assume there will follow a further period when either a further interim dividend will be paid and/or a possible final dividend - thereafter if any shortfall will probably need to be re-claimed via the FSCS - could take at least a year.

I have personaly written this money off and am having to start to build a trading bank from scratch. Luckily I was not exposed enough to affect my standard of living but feel very sorry for the many thousands who perhaps are. HOW CAN THIS BE ALLOWED TO HAPPEN IN THIS DAY AND AGE ????

It would appear that the FSA after numerous inspections and audits found shortfalls and irregularities with many financial organisations in respect of client funds but were completely useless at doing anything about it.

I can understand the problem of the Administrators having to close positions or transfer them however after reconciling each client account - this PROTECTED ( as in Escrow ) money should have been transferred immediately back to clients.

Exactly where is your money safe - with financial institutions especially Banks and the City in general all behaving like barrow boys it would seem the only guarantee is hard cash !!!!!!!!
 
I have fairly substantial funds locked up in the administration process although would like to think that I could write those funds off, I will not and will pursue the claim for full repayment whatever the time scale and whatever it takes.

My funds were in a segregated account and as no trades were current at the time of bankruptcy should have been untouched and secure. If they had been misappropriated and used as gambling capital for which I have to take some of the loss then the segregation has failed and the watchdog failed in its duty. Both the individuals who flouted the rules and those who allowed the rules to be flouted are responsible and should be held to task.

Over the past 25 years I have had 4 brokers find themselves in deep trouble which has usually been through one trader or a consortium of traders walk away or vanish after reckless trades which destroyed the pool of trading funds. Although I never lost a penny with take-overs or funds found to make the situation whole, there have been a couple, in which I have not been involved where fat fingers or pure shoot for the moon trades have wiped out pooled traders funds.

The move towards segregated funds was to eliminate the fear of total loss in the event that an individual or a group took reckless risks and took everybody else down with them. If the holding company can at the behest of individuals at the top destroy the segregated pool then IMO it will set a precedent, revert to the high risk days of yesteryear and IMO if one of the biggest brokers can go under, none will be safe.

My other accounts have all now been changed to the minimum needed to do the business I require and although at a cost to me draw downs and margin (if required) is my way forward.

I feel extremely angry about this possible breach of trust. What is the point of slogging away for years using discipline through money management to build up a substantial account when some idiot can choose to bet the farm and everybody else's on a reckless make or break deal.

IMO the entire brokerage industry is in the frame here and the days of clients leaving 10's or hundreds of millions sitting in brokers accounts may soon be over.
 
I have fairly substantial funds locked up in the administration process although would like to think that I could write those funds off, I will not and will pursue the claim for full repayment whatever the time scale and whatever it takes.

My funds were in a segregated account and as no trades were current at the time of bankruptcy should have been untouched and secure. If they had been misappropriated and used as gambling capital for which I have to take some of the loss then the segregation has failed and the watchdog failed in its duty. Both the individuals who flouted the rules and those who allowed the rules to be flouted are responsible and should be held to task.

Over the past 25 years I have had 4 brokers find themselves in deep trouble which has usually been through one trader or a consortium of traders walk away or vanish after reckless trades which destroyed the pool of trading funds. Although I never lost a penny with take-overs or funds found to make the situation whole, there have been a couple, in which I have not been involved where fat fingers or pure shoot for the moon trades have wiped out pooled traders funds.

The move towards segregated funds was to eliminate the fear of total loss in the event that an individual or a group took reckless risks and took everybody else down with them. If the holding company can at the behest of individuals at the top destroy the segregated pool then IMO it will set a precedent, revert to the high risk days of yesteryear and IMO if one of the biggest brokers can go under, none will be safe.

My other accounts have all now been changed to the minimum needed to do the business I require and although at a cost to me draw downs and margin (if required) is my way forward.

I feel extremely angry about this possible breach of trust. What is the point of slogging away for years using discipline through money management to build up a substantial account when some idiot can choose to bet the farm and everybody else's on a reckless make or break deal.

IMO the entire brokerage industry is in the frame here and the days of clients leaving 10's or hundreds of millions sitting in brokers accounts may soon be over.

I dont want to worry anyone unnecessarily but this article seems to suggest that you may get nothing from MF Global. Obviously you will still have some cover from your financial regulator.

MF Global and the great Wall St re-hypothecation scandal
 
I dont want to worry anyone unnecessarily but this article seems to suggest that you may get nothing from MF Global. Obviously you will still have some cover from your financial regulator.

MF Global and the great Wall St re-hypothecation scandal

Thanks for the link.

I have read all sorts of speculation as to what may or may not happen and in particular how different rules work under the jurisdictions of different countries.

I have accounts with US brokers but were both funded and entered into via UK subsidiaries. With those accounts as with my MfGlobal account UK rules and regulations should apply. With the direct USA based account I have with another broker I would expect to be treated under American rules.

Far from being alarmist your link provides the very reason why the Man Financial issue has to be resolved properly. If an undesirable outcome is the end product the I suspect that a steady move will take place where masses of retail traders leave the markets along with most of the support services including brokerages etc etc. The industry could slowly contract back to banks fighting it out with algorithms.

It could mean that a short term exploitation brought about the end game and killed the golden goose. I think in the end that some arm twisting will be done to make sure that the Wall Street profit game continues without frightening off the retail players.
 
I see someone on babypis.com reporting that they have received their account balance in full by cheque. No word on whether the cheque has bounced or not!
 
I see someone on babypis.com reporting that they have received their account balance in full by cheque. No word on whether the cheque has bounced or not!

For different countries there are different procedures but for the UK those with client accounts have protocols to follow which are laid out in the following url.

MF Global UK special administration | KPMG | UK

The protocols are in the top green bar "Client and creditor claims process-new item".

There are choices of electronic submission, printed hard copy submission or in about a week hard copy should arrive by post.

For those with segregated accounts I am optimistic that most if not all of the funds will eventually be returned. Whether it be hundreds, thousands or millions this process for me is a test of UK regulations within a multi national globalised bank\broker environment. I have a belief\hope that our regulations will stand the test. However I would not be optimistic for non segregated accounts.
 
If you have time read the below link. It gives a whole new slant on things.

MF Global and the great Wall St re-hypothecation scandal

Yes I have read it.

The entire article deals with what I would classify as non segregated accounts where funds are pooled and within the pooled framework it always has been the case that any individual or the holding group can damage the collective holdings or in the worst case scenario lose the lot.

I remember a case when Liffe switched to electronic where ex floor traders, within a brokerage, lost everything when one trader lost the farm and the the pool's farm on a bad trade. The emergence of segregated funds where retail traders funds were ring fenced and untouchable was brought in to prevent that happening again.

The article also makes reference to hedge funds\funds which by their nature are professionals and although I have no knowledge may have had to be non segregated and their resources pooled. The clauses mentioned in the article re: what the broker may do with funds is not only something that I have never seen but I have not even seen that document which somewhat points to the fact that retail traders in segregated accounts are not asked to sign that which is not applicable to segregated retail clients.

Although concerned, I feel reasonably confident that the segregated funds will be paid out whether in part or full at some point but have limited to zero confidence that pooled funds will ever be seen again.

The principle and logic is simple. With non segregated funds losses are shared within the pool if a trader loses more than he\she can ever pay. Controls should be in place to ensure that no individual threatens the pool. However if the broker who should be the controller bets everything and loses the lot then the pool plus broker is finished. The broker is no different than any member of the pool but may choose not to apply the same level of constraint as they apply to pool members. The rules, agreements and onerous clauses convey appropriate risks to pool members.

Segregated funds cannot legally be included in pooled losses because they are ring fenced and legally untouchable. They should be held in accounts which are outside of the use or availability to brokers other than to facilitate trading for those within those segregated accounts and if they are pooled either before or after a calamity then it is not a misinterpretation of the law but something rather more serious.

My confidence is buoyed up by the fact that if segregation counts for nothing then there is little point in having money lodged with brokers if they can destroy even protected accounts. From brokers I am with and from others I have contacted in the past, I have received loads of e-mails out-lining their protective measures via segregation and non risk use of funds to (a) stem the outflow of cash (b) to avoid the loss of clients and (c) to hopefully attract new clients. The brokerage industry is concerned and if segregation fails with Mfglobal the question which is begged who can you trust if a precedent is set and the answer is nobody.
 
This should be encouraging news for all those with segregated accounts in the amount of £50K or less: FSCS > Update for customers of MF Global UK Limited

HTH

M

Thanks for the link.

I do not understand why the FSCS is getting involved so early in the proceedings as within the KPMG documents they are described as the compensation fund of last resort.

Obviously as they state they are liaising with KPMG it looks as though there may be some claims which will pass through them but first they have to declare default which according to their searchable data base is not the case as yet.

It looks like this is going to a very long haul and I wouldn't mind betting that part payment comes from the liquidator and the rest from the FSCS once it is determined that no more money can be found and default is declared.

It is however a good thing that FSCS is working alongside KPMG which should mean that they are up to speed and take a proactive role in contacting clients.
 
Some more news here:

Dear Sirs

MF Global UK Limited (“the Company”) (in special administration)
Joint Special Administrators – Richard Heis, Michael Pink and Richard Fleming
A meeting of creditors and clients of the Company will be held at the Barbican Centre, Silk Street, London, EC2Y 8DS on 9 January 2012 at 11:00am, to consider the Joint Special Administrators’ Proposals and whether to establish a creditors’ committee comprising representatives of creditors and clients.

In view of the large number of creditors and clients, in accordance with Rule 297 of The Investment Bank Special Administration (England and Wales) Rules 2011, certain statutory documents are being made available electronically. The following documents can be viewed and downloaded from = KPMG UK = (the “Website”):

a) The Joint Special Administrators’ Proposals;
b) Formal notice convening the meeting of creditors and clients;
c) Client Asset Claim Form and guidance note;
d) Client Proxy Form and guidance note;
e) Creditor Claim Form and guidance note; and
f) Creditor Proxy Form and guidance note.
(the “Documents”).
Hard copies are available on request and free of charge. If you wish to receive hard copies of the Documents, please:
a) telephone 020 3321 4195; or
b) email [email protected]; or
c) write to MF Global Claims, 5 Churchill Place, Canary Wharf, London, E14 5HU.
Creditors’ and clients’ respective claim and proxy forms are also downloadable from the Website . If you wish to vote at the meeting, please return via email or post your completed proxy and statement of claim by 12 noon on 6 January 2012. Please refer to the guidance notes on the Website to assist you in accurately completing the relevant claim and proxy form.

For further information regarding the Documents, please see the frequently asked questions on the Website.

Yours faithfully
for MF Global UK Limited
Michael Pink
Joint Special Administrator
Richard Heis, Michael Robert Pink and Richard Dixon Fleming were appointed as joint special administrators of MF Global UK Limited.

The affairs, business and property of MF Global UK Limited are being managed by the joint special administrators who contract as agents of MF Global UK Limited without personal liability.

Richard Heis and Michael Robert Pink are authorised to act as insolvency practitioners by the Institute of Chartered Accountants in England and Wales.
Richard Dixon Fleming is authorised to act as an insolvency practitioner by the Insolvency Practitioners Association.
MF Global UK Limited is authorised and regulated by the Financial Services Authority. FSA reference number 106052. Registered in England No. 01600658. Registered Office: 5 Churchill Place, Canary Wharf, London, E14 5HU. VAT No. 911 4146 61.

If you are not an intended recipient of this e-mail, please notify the sender, delete it and do not read, act upon, print, disclose, copy, retain or redistribute it. Disclaimer | MF Global - for important additional terms relating to this e-mail. Richard Heis, Michael Robert Pink and Richard Dixon Fleming were appointed as joint special administrators of MF Global UK Limited and joint administrators of MF Global UK Services Limited. The affairs, business and property of MF Global UK Limited are being managed by the joint special administrators who contract as agents of MF Global UK Limited without personal liability . The affairs, business and property of MF Global UK Services Limited are being managed by the joint administrators who contract as agents of MF Global UK Services Limited without personal liability. Richard Heis and Michael Robert Pink are authorised to act as insolvency practitioners by the Institute of Chartered Accountants in Englan d and Wales Richard Dixon Fleming is authorised to act as an insolvency practitioner by the Insolvency Practitioners Association. MF Global UK Limited is authorised and regulated by the Financial Services Authority. FSA reference number 106052. Registered in England No. 01600658. Registered Office: 5 Churchill Place, Canary Wharf, London, E14 5HU. VAT No. 911 4146 61.
 
Mayfly,

Thanks for posting the update.

I received the e-mail from the liquidators earlier today. Earlier in the week I also received acknowledgement of my postal claim so albeit slowly the wheels are turning.

Although only quickly speed read, the Pdf document is going to take a bit of digesting at 90 pages long and filled with legal jargon.

I still feel reasonably confident that for segregated fund clients it should work out OK. Somehow through reading various documents I get the feeling that to reduce the numbers from 10,000+ customers they will clear the uncomplicated ones with a settlement and then work through the complex ones to minimise the numbers passed on to the FSCS.
 
Hi:can someone update me about mfg claims,i have a spreadbetting acc with MF global,i have already sent claim forms to KMPG but now receive forms from FSCS,do i need to fill and send these also?
 
Hi:can someone update me about mfg claims,i have a spreadbetting acc with MF global,i have already sent claim forms to KMPG but now receive forms from FSCS,do i need to fill and send these also?

I also have sent the forms into KPMG and have received forms from FSCS.

The FSCS could not operate until they considered that MF global was in default or likely to default. They now determine that MF Global is for their purposes "in default" which strongly implies that no money will be forthcoming from the liquidators and we must seek our money back from FSCS.

Reading through and filling out all the forms is a bit of a pain but as long as the money eventually comes back the effort will be worth it.

It does look as though FSCS are the people who will recompense us, providing the amount did not exceed £50K.
 
Traduk, I have a big amount of money stuck at the MF Global mess. However, I never had an account with MF Global.
My account is at another broker that used MF Global as the final broker.
I was told by this broker that the claim to KPMG was submitted by Dec 10th, 2011. I haven't received any paper nor from KPMG or the FSCS.

Do you think I should talk directly to either KPMG or FSCS to check is everything is working properly?

Thank you very much
 
I see from your flag and profile that you are USA based.

All of the correspondence I have received and with others on the forum are for UK clients. The links to KPMG are for the London based part of the liquidators and the FSCS is the UK based "Financial Services Compensation Scheme" which again is a UK based scheme working in conjunction with the FSA ( Financial Services Authority ).

The process we are working through is a compensation scheme put in place to protect client funds in the event of financial failure.

I realise that none of it is helpful to you but there are regulatory bodies in the States who I believe have a duty to protect and pay out for client losses in the case of bankruptcy.

Your situation is complicated. I would think that your broker who used MF as a clearer has the obligation to you and it sounds as though they are acting to try to get funds back which were held at MF. If your broker was a subsidiary of MF which is unlikely as they would have gone under as well, then in your position I doubt that any regulatory body would deal with you directly as they have a responsibility primarily with clients.

You need to keep the pressure on your broker as they are the people who ultimately have the responsibility to you as a client.

Sorry I know its not helpful but I wish the best of luck.
 
Thank you for your answer.

Actually, I lived in the States when I first joined trade2win.com but now live in Europe and my money is stuck at MF Global Uk.

You are right about putting pressure to my broker. I might call a lawyer if the the first portion of money from MF Global Uk is handed to clients and don´t receive anything. By the way, it´ve just read that KPMG will start paying as soon as this month. Hope so!

Regards
 
KPMG state that they have so far recovered 82% of Client Monies ( £594 million ) the remainder being largely held by affiliates and in particular MF Global Inc. That suggests approx £130 million unlikely to be recovered.

Assume we will get dividend from KPMG with the shortfall being paid by FSCS ? - which I guess worst ways is encouraging for an eventual 100% recovery .
 
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