Refco - Anyone Long?

[Parky]

A couple of comments

this would never have happened if dick & bunker were stll running the show.!!

who do you think constitutes a better arcade if rts&tca are ignored??

It depends on the level of protection you require, medium balance sheets, Kyte, GHF & Schneiders, the best balance sheet avialable at the moment is Fortis.
Xconnect who have exchange membership and have direct connectivity to the markets but dont clear, all their traders have direct clearing accounts with Fortis, so a hybrid of the two styles.

 

[green genie]

Not TCA, the difference here is that eveyone will get their money back it just may take a little time. This is not a bad trade, this is bad news and the flood of clients taking their money out on the back of the news and snowballing the situation.
Refco have a good balance sheet and are FSA registered to hold client funds so under FSA and CFTC rules will have too make good all client balances. Refco have a substantial balance sheet so this is not a "Griffin" or "ICA".
My advice would be to find another high quality balance sheet arcade where you would enjoy the same level of protection.

In today's Times there is a statement from REFCO that says
"In light of recent events, the liquidity within [our] non-regulated subsidiary, Refco Capital Markets Ltd, which represents a material proportion of the business of the company, is no londer sufficient to continue operations."

Sounds like some people might be waiting along time for their money....

 

[Parky]

In today's Times there is a statement from REFCO that says
"In light of recent events, the liquidity within [our] non-regulated subsidiary, Refco Capital Markets Ltd, which represents a material proportion of the business of the company, is no londer sufficient to continue operations."

Sounds like some people might be waiting along time for their money....

I think the clue is in the "non-regulated" which means not client related. RTS is regulated and therefore as I stated gives a level of client protection and will enable clients too withdraw their funds.

 

[green genie]

Then how come people can't take money out for 15 days? REFCO must need the money to solve it's liquidity problem. What's to stop REFCO saying that there is no money to give back to the clients?

 

[Parky]

Then how come people can't take money out for 15 days? REFCO must need the money to solve it's liquidity problem. What's to stop REFCO saying that there is no money to give back to the clients?

The FSA and CFTC, the regulated elements of the business have an undesputable obligation to secure client funds up too the balance sheet of the company. In the case of Griffin, Mr Park lost more than the balance sheet of the company. There is no black hole at Refco just a crisis of confidence. if there was any question otherwise then FSA would already be round there and the exchanges would have stopped them trading. Check out the press release from the CME overnight:-
" CME's clearing member, Refco, LLC, is a subsidiary of Refco, Inc., but is a separate company with its own accounts, assets and customers. These accounts, assets and customers are protected through a comprehensive federal statutory and regulatory regime and other financial safeguards and risk management protections provided by the CME Clearing House. All customer funds are required to be segregated from firm assets, held in specially identified accounts and are not subject to any creditors' claims against the firm"
The same is true of LIFFE, Eurex and the CBOT. In short no problem with "client" funds.

 

[Directional]

Then how come people can't take money out for 15 days? REFCO must need the money to solve it's liquidity problem. What's to stop REFCO saying that there is no money to give back to the clients?

You're confusing Refco Capital Markets with other Refco group companies.

RTS and Refco Overseas are seperate FSA regulated companies, with plenty of cash and a good balance sheet.

As I said earlier, its business as usual here at RTS and traders can trade, make deposits or take withdrawals from their accounts as normal.

 

[$spreader]

I reckon there will be more withdrawals than deposits if that's the case.

 

[TWI]

Refco have a good balance sheet and are FSA registered to hold client funds so under FSA and CFTC rules will have too make good all client balances. Refco have a substantial balance sheet so this is not a "Griffin" or "ICA".

Parky, hope your right but they have been done by the CFTC before in 1994 for dipping into segregated funds to pay loans. Just cos the FSA says it is a rule doesn't mean everybody follows them.