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MF Global Australia - What are you doing?

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I do feel for you guys who were with MF global.. i have a mate who had a fair amount of money with them also. I sincerly hope you get all your funds returned soon. I am with interactive brokers and am scared they too might colapse not that ive heard anything. what do you guys think?
 
Are there any margin FX customers that have been affected by the freeze on client funds at MFGA?

I am having difficulty getting a definitive explanation from the administrators as to what is actually causing the delay in returning client funds within this pool.

80% cash held with the remainder with the Singapore MF entity.

I have just been told by the administrators that they believe the Singapore entity has closed out all positions and that they are awaiting information on the close out positions for individual clients from KPMG.

Does anyone have anymore information regarding the Margin FX pool specifically?
 

Keep your eye out for warning signs... the share price will not be a perfect signal, but it's better than nothing. This is why I've moved my trading to IG even though they are not the cheapest or with the best platform.

 
Walkabout said:
I am with interactive brokers and am scared they too might colapse not that ive heard anything. what do you guys think?
Click to expand...

Hi

do your own research and do not trust anyone!

I was a bit worry about MF Global situation shortly before it went into administration. I could have my funds transfered from MF, however I had a chat with my MF advisor and I had changed my mind

Now you could say they were at least incompetent.

Hi xxx

Attached are information on our financial standing. Most importantly the funds you have with us are held in a Client Segregated account where we are not allowed to use to cover our operating costs. It is illegal to use them for anything but clients trading ie margin payments and withdrawal.

MF Global Australia is part of MFG US but the client segregated account in Australia only holds client deposits belonging to Australia and we donot use pay MFG US clients. If you are still worried after going through the articles, you can have excess funds transferred to your account if you're not trading. This is understandable.



Regards

xxx
Client Advisor

xxxx
www.mfglobal.com.au

Follow MF Global Australia on Twitter: twitter.com/MFGlobalAU


From: Markisic, Daren (AUS Int)
Sent: Thursday, 27 October 2011 10:42 AM
Subject: MF Global Information

Attached is some MF Global information on the current situation. Basically, it is business as usual and we hold client funds in a client segregate fund account at Westpac.

Bloomberg is reporting a speculative situation with Goldman Sachs, Citi and/or Evercore Partners, please follow the below link for further information.

http://www.bloomberg.com/news/2011-...ll-profit-if-it-buys-mf-global-bove-says.html

Keep in mind we hold memberships at almost every exchange globally, which in itself it worth a pretty penny.

I will keep you up to date if anything changes, however, at this point we expect no change.

If you have any questions please contact me on my direct line below, or on my mobile after hours.

Regards,
 
Hi Riskapur,
So what do you make of DB taking 20% of the $48 mil to offset claims & expenses, illiquid positions & market movements.

My thinking is how did they arrive at the numbers (I want to see a breakdown).

Perhaps the first step is get as much publicity of what DB has done to us.
I think a visit to DB by 1000 + clients would have terrific impact.
Is there anyone out there who has organised a mass protest ?


CFD clients

Deutsche Bank (DB) update

On Wednesday 23 November 2011 DB provided the Administrators with information regarding the close out of all MFGA positions. On the same day DB transferred to the Administrators $38m. This is $10m less than recorded in the records of MFGA as at 1 November 2011 and as reported at the first meeting of creditors on 11 November 2011.

The difference includes, amongst other costs: market movements; illiquid positions still held; offset claims and expenses; adjustments. We are in the process of reviewing this information and DB's claims for deductions & offset. We do not have a timeframe for how long this exercise will take.
 

I had no open positions, does that mean if I don't get my full account balance back I have to sue all the people who lost money with open positions. After all, why should I suffer for someone else's trading loss!?
 
Tanaka said:
I had no open positions, does that mean if I don't get my full account balance back I have to sue all the people who lost money with open positions. After all, why should I suffer for someone else's trading loss!?
Click to expand...

Tanaka, what a great (& selfish) idea ....
1) read your client agreement: ... segregated account means funds are co-mingled among traders ... means each trader is exposed to the actions of other traders ... but should not be exposed to wrong doing from the company (Jon Corzine & Co.) ... good luck with any legal action
2) if you don't trade, why do you keep money in a trading account? There is hardly any interest paid, the money is at risk (see point #1 above) - could only mean you did not care much about safety or return on these funds, otherwise you should have pulled them out and placed them on a cash management account with one of the big 4 banks, ING direct, .... (guaranteed by the government since the GFC)
3) the consequences of multiple legal actions by people like you are very simple: the "merchants of conflicts" aka the administrators and the legal profession will have a feast - there is plenty of money in the honeypot, watch the bees coming! So instead of losing maybe 5% or 10%, you might end up losing 20% on your money - just watch the speed at which deloitte is burning our money ... add to this your legal costs + the legal cost the Administrators will be delighted to engage to fight off your claim (after all who can blame them for doing anything they can to stay as long as they can and generate as much revenue as possible ... we live in a capitalistic society, don't we? and we can hardly blame them as traders, can we?)
4) I kept the best one for the end - instead of ALL getting our money back in a matter of days (yes we could, just check out what the CCC is doing in the US - commoditycustomerscoalition.org / James Koutoulas), this thing will drag forever. If you've heard about opportunity cost, then the cost us ALL having our money frozen greatly outweigh nay haircut resulting form not bringing 100% of the money home.
If you do trade, then you could make this up in no time.

My recommendation: let's deloitte complete the collection of money that still sits overseas, and then let's just share the pool on a pro-rata basis using our (twice daily reconciled) statements. As the US will do, this is the quickest, most pragmatic, cheapest way of doing this (see recommendation put forward by the CCC and supported by the CME).
Do you prefer receiving 90% or 95% of your money next month, or 100% less 20% to 30% for legal and administration fees in 12 or 24 months?

If you still want to sue, I suggest you do this after we all receive what we can get.
And rather than suing each other, it would be smarter IMHO to look for avenues to get the money back from the Professional Indemnity insurance (there as been a crime committed) or to sue Jon Corzine and Co.

pf
 
As a CFD client I will be pleasantly surprised to get 90% to 95% of my money back. After all it appears that DB have helped themselves to 12% of the total CFD pool.

As to timing, I doubt if the Administrators will release funds until they are sure that they don't need to apply to tap into client funds for their own purpose.
 
Tanaka said:
I had no open positions, does that mean if I don't get my full account balance back I have to sue all the people who lost money with open positions. After all, why should I suffer for someone else's trading loss!?
Click to expand...

It is not known at this stage what the process of calculating accounting balance would be. I'd imgaine those with open positions who suffered adverse market movements will see their account balance reduced by those movements. There is no reason to believe that the trading losses should be distributed amongst account holders.

To put things in context, DB held ~$48m in MFG funds which supported margined positions. I don't know what margin rates but that $48m could easily support $240m of positions at 5x leverage.

DB has withheld $10m, of which $2m is reportedly offset against some other parts of MF. I also remember reading somewhere that they are charging a large commission so that can easily account for another $1m.

They claim to still hold some illiquid positions (which is contrary to the "All CFD positions are closed" claim) and they might actually hold back the full position size (say $2m?) as opposed to just the margin. The rest can easily be market movement (~$6m) - and that's $6m over $240m worth of positions, or just 2.5%.

Pure speculations on my part but until the details emerge on what those $10m held by DB consist of it is not possible to conclude how much account holders can get back.

The good news is that the administrator now controls ~80% in cash so that should be the minimum amount for those with no open positions. I just hope that Deloitte will distribute the majority of these funds under control as a partial payment first, instead of waiting for the last $ to come in... I am sure the creditors will push for that as well.
 
Hi Ske,
"There is no reason to believe that the trading losses should be distributed amongst account holders" makes a lot of sense to me.
I think the only time the folks with no open positions (like myself) should suffer is if there is a short fall in the total pool amount. I think the strategy I would follow would be to wait for the Admin to distribute what is owing to me first before going down the path of legal action for any short falls. The Admin would love to prolong the gravy train forever so lets not be too impatient.
 
Hi Hatton01,

No doubt DBA are clipping very large spreads on all close out trades. The problem with CFD's instead of futures, however is that DBA is the counterparty to all of MFGA trades - this means it is very difficult to prove what was a reasonable price to close out the contract unless you were sitting in DBA's office watching them close out trade by trade - supposedly the administrators or ASIC's job or both - but I doubt either of them they did this. The best you can do is check the range of the security price on the day DBA supposedly closed out the trade - and if they consistently close out at the worst price for the client you know they are taking advantage of the client as per above - but again very difficult to prove.

So this means that if you executed a long position CFD position with MFGA, DBA could advise you they have sold it at the lowest point over the last 3 weeks, since the time they were instructed to close it out. DBA would have done the hedge internally through their trading book and therefore it would be difficult to prove what the hedge transaction was. That means DBA take the profit between the actual hedge price (well above the low of the last 3 weeks) and the price they tell MFGA it was closed out (by looking at past history of last 3 weeks of worst price for customer) - basically free money for DBA and the customer gets raped.

At least with futures you can demand to see the other side of the trade - which the exchange would have a record of. Doesn't guarantee you get better close out prices but it does offer a closer monitoring of the close out trade, the prices executed and the time the trade was done. I am sure this is what DBA are doing. Ask yourself this - the futures positions were closed out - balance expected was $36 million - actual cash to be returned $34 million. Difference 5.5%. DBA balance at start $48 million - positions supposedly closed out 1 week ago - DBA still holding $10 million and returning $38 million - difference is 20.83% - why - because CFD customers are being raped by DBA

You can try protesting outside DBA but I really think that ASIC is more to blame by allowing counterparties like DBA rape customers, withhold money (against Client Seg Rules) and not do anything about it. If DBA are charging commission on MFGA close out trades in excess of what is in the MFGA client agreement then this is a breach of Companies Law and needs to be punished by ASIC. This is in addition to their current breach - witholding client money as a set off and trying to get preferntial treatment against other supposedly equal account holders

ASIC has shown what a joke the Australian Securities industry is and how little protection there is for client account holders at brokers relative to other jurisdictions.

Ask yourself this – how is it that there is a shortfall of $1.2 billion in the US and clients are still getting some money back. There is no / minimal supposed shortfall in Australia and Deloitte has access to well over 50% of futures balances in cash, over 80% or Margin FX in Cash and over 35% of CFD pool in cash. Why can’t they immediately release back to account holders 75% of Margin FX pool, 50% of Futures pool and 30% of CFD pool.

The argument that Deloitte put forward they need to see all cash balances and positions closed out is absolute rubbish – this presumes that MFGA will have to pay out more balances to counterparties and get zero back in return and this is after all positions have been closed and cash balances known.

My view is that ASIC and Deloitte are too gutless to enforce the regulation like they should. Deloitte undoubtedly have, separate to MFGA, other tax and audit business with DBA they don’t want to jeopardise. I think they only way you have a chance in getting ASIC to act and enforce regulations is if they are highlighted in the media as being totally incompetent relative to regulators in other jurisdictions or if they see the Australian Broking industry on the verge of collapse because all account holders take their balances out of brokers accounts. If ASIC did enforce regulations and revoke DBA’s license this would send a very strong message that the Client Seg rules have to be respected. But this is unlikely to happen so as you can see there is very little protection to client account holders relative to other jurisdictions.

My opinion on court action is that we, collectively as account holders, should get as much of our money back ASAP – if that means taking a 5% - 10% haircut to get it back sooner then we should. We can make the rest back by trading. Our time is worth more than this order of loss. We are better off having exposure to just ourselves as account holders (especially with positions being closed out) than taking legal action against ASIC, Deloitte, ASX, DBA etc and see the client balance pool deplete in which case we would have a bigger shortfall in the pool and have to try and reclaim this with other unsecured creditors against the balances in the MFGA company accounts – bad position to be in. If individual account holders want to take legal action they should take this up independently with the relevant parties themselves, after final balances are paid out to all account holders, and not subject other client account holders unfairly to this action.
 
I'm only kidding about suing!

I do all my trading through IB these days. I left a small amout with MF Global just in case a signal came up on the ASX and then I could use a CFD. I don't hold my money in trading accounts I had all positions closed b4 all of this went down.

*Note to self read IB's PDS after typing this.
 
Riskapur / Hatton01 - agree with you 100%, we need the money back asap. If deloitte can extract more money from the like of DBA, good on them, but they don't need to hold our money frozen while they do this. If more money comes later, it can always be distributed.
If anything, getting the money out asap is basic risk management - the longer it stays in the hands of the Administrators, the higher the risk.

Hatton01 - that's right. Every person with open positions at the time of the collapse will have to take the cost of slippage. That's the reality of trading. Below is an extract of MFGA PDS:
[…]
(d) Under certain conditions, it could become difficult or impossible for you to
close out a position. This can, for example, happen when there is a significant
change in prices over a short period.
(e) All exchange traded derivative contracts involve risk and there is no trading strategy that can eliminate it, placing of contingent orders (such as a 'stop-loss' order) may not always limit your losses to the amounts that you may want. Market conditions may make it impossible to execute such orders.
(f) Under certain market conditions it may also be difficult or impossible for you to manage the risk of open positions by entering into equivalent and opposite positions in another contract month, on another market, or where relevant, in the underlying instrument.
(g) Under certain market conditions the prices of exchange traded derivative contracts may not maintain their usual relationship with the
underlying market.
[…]
Surely, these were extraordinary circumstances, in which one should reasonably accept that closing positions had become difficult or impossible. There is no way traders with negative slippage should have the other account holders share their losses (they wouldn't come forward if they had enjoyed positive slippage, would they?). Unless the slippage is such that it exceeds the cash they have in their accounts and they declared themselves bankrupted, it should not affect the pool, just their balances.

Tanaka - glad you're just kidding. And yes, probably all of us will think twice about how much money we should leave in the broker's account.
 
Taking into account the recent update from deloitte, 81% of the funds have been recovered in the CFD pool and 67% in the futures pool (before the pending recovery of the $34m from ASX). Please find attached the updated figures for each pool.

View attachment 1111 24 Futures pool.pdf - View attachment 1111 24 CFD pool.pdf

Just thought of another reason while the Administrators may not be so keen to distribute our funds quickly: all the time our money is sitting in the segregated account, the accumulated interests flow back to MFGA, where deloitte will initially look for funds to cover its fees. The initial ~$140m that were sitting in Australia as of 1-Nov would return $0.7m in the first month. Add to this the additional collections (nearly $70m last week) and the compounding effect, and you'll see the incentive for the Administrators to take things slowly.

pf
 
piFouSyd - exactly the interest keeps building up on OUR accounts to pay unsecured creditors - this is almost criminal in itself. Hence the delay in payment.

Check out the link below - MF Global FX customers in Canada will get PAID ALL their balances back within a week - due to to a fund that protects their deposits - this is proper protection of client money up to the maximum threshold for the cutomer protection they have in Canada. And it demonstrates how a regulator should act.

http://forex.blog900.com/2011/11/26...-clients-to-get-the-money-back-by-december-2/

The point is they have proper proection and the pay their customer back - not the joke situation you have in Australia - no protection at all and ASIC is too gutless to enforce the repayment of customer funds and allow parties like DBA to legally steal money from customers (this is the case until ASIC order DBA to fully pay the customer balances back less a reasonable amount of closeout slippage) .

ASIC and Deloitte have NO EXCUSE to withold customer money - they MUST authorise reasonable partial payment immediately - all positions are closed and they have access to more than 50% of all product pools in CASH.

There is a serious with the system and lack of client protetction in Australia - hence I have taken all money out of Australian Brokers and opened up accounts in Canada, and the UK (where there is some protection under FSCS up to £35,000)

In the US the system is just obviously corrupt - have a look at the link below
http://www.huffingtonpost.com/janet-tavakoli/mf-global-revelations-kee_b_1107097.html

The regulators and trustees obviously know where this "missing" USD 1.2 billion is
- they just can't tell the public as it would implicate the regulators who are supposed to protect the customer balances. Then the whole US Broking Industry would collapse as customers clamber for the exit to withdraw all their balances. USD 1.2 billion does not just disappear - no one wheels out the cash in wheelbarrows these days - everything is electronically traceable and CME supposedly did an audit of MFGUS on 26 October that reconciled all customer balances. The trustee and adminstrators and regulators really expect us to believe that in those 6 days (between 26 October and 31 October) when the USD 1.2 billion was stolen - they are unable to trace this over the last 3 weeks???

The big lesson in this folks - where possible only open your trading accounts where there is proper protection in place (eg a compensation scheme like in Canada or the UK or Ireland) and you don't have corrupt regulators like in the US or gutless ones like you have in Australia.

In my view, Corzine will unlikely get prosecuted or go to jail - as he will likely implicate the CFTC and the SEC, saying they knew about or were complicit. It is likely his lawyers will argue that at least one of these authorities knew about the stealing of customer money and co-mingling of customer funds well before the bankruptcy notice on 31 October.
 
2 other points -

If CME can put up $600 million to partly cover the shortfall in the US to try and give client holders some extra money back - why is it that the ASX can't even put up $3 million to cover their shortfall in Australia???

In the US, I suspect the delay is not in finding the money but devising a plausible story that will minimise expsoure of the cover up between criminal actions of MFGUS directors and corrupt/negligent regulators
 
How many of you have actually written to the Administrators, attaching an account statement, and asking for a redemption of your funds?

The Administrators' role is to replace the management and they have broad powers. Until you have actually asked for your money, they can justify not giving it back. The more people who demand their money will put more pressure on them to at least provide a partial redemption. This can be done by email followed up by snail mail.

The current situation has the potential to turn ugly very quickly (litigation) and it is important we get some money back as quickly as possible.

I am currently involved in another Administration situation which has been ongoing for 20 months with no resolution in sight.
 
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