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Anyone pulling money out of MF Global?
- Thread starter Daal
- Start date
Missing money, $650m, is in a custodial acccount at JPmorgan
An MF Global custodial account at JPMorgan contained about $658.8 million of client funds as of Oct. 31, according to one of the people, who declined to be identified because they werenââ¬â¢t authorized to speak publicly.
http://www.businessweek.com/news/20...ent-funds-said-to-be-located-at-jpmorgan.html
How stupid is that. If MF accounts that properly, IB buys the brokerage and none of this sh.. happens.
http://www.businessweek.com/news/20...ent-funds-said-to-be-located-at-jpmorgan.html
How stupid is that. If MF accounts that properly, IB buys the brokerage and none of this sh.. happens.
I wonder if JP Morgan was using that as collateral and realized what kind of sh.. they'd be in if they now tried to hold onto it. So collateral becomes custodial ... and let's get the money back to the rightful owners.
So with the following big IFs
1) IF the main issue is 6B of 1-year Italy + Spain bonds
2) IF they really had not touched a 1.3B line of credit on Oct 25 and drew it down thereafter
I don't see how they could actually have needed to "borrow" customer money to meet a short term liquidity crunch
The biggest losses they could be looking at on those bonds would be like 3%, which on 6B notional is 180M. Even if they got hit for an extra 5% for collateral or something when their credit got downgraded, that still means a liquidity demand of less than 500M, while they got 1.3B from the banks syndicating that credit line.
Since they need to pay back the 1.3B (if they are a going concern), then they might have been insolvent and regulators might indeed have needed to force them into bankruptcy, but they shouldn't have been illiquid and hence I can't see why they would need to deliberately dip into the customer accounts and all go to jail for it.
Liquidity wise, with the 1.3B from the line of credit and the "missing" 600M form customer accounts, there's almost 2B in short term funds versus the European debt position creating a demand for long single digit 100Ms.
All of this seems very consistent with the claim that the hole in their books was mostly about not counting 2B at JPM, with 600M of customer money in that 2B.
Of course, there could be some sort of massive 2B fraud thing happening but the headline stories about what's not that big a Euro debt position can't possibly explain things, so it seems more likely they were bankrupt more in the sense of "no money, no way to make money going forward" than in the sense of "we need 600M by tomorrow"
Thoughts?
1) IF the main issue is 6B of 1-year Italy + Spain bonds
2) IF they really had not touched a 1.3B line of credit on Oct 25 and drew it down thereafter
I don't see how they could actually have needed to "borrow" customer money to meet a short term liquidity crunch
The biggest losses they could be looking at on those bonds would be like 3%, which on 6B notional is 180M. Even if they got hit for an extra 5% for collateral or something when their credit got downgraded, that still means a liquidity demand of less than 500M, while they got 1.3B from the banks syndicating that credit line.
Since they need to pay back the 1.3B (if they are a going concern), then they might have been insolvent and regulators might indeed have needed to force them into bankruptcy, but they shouldn't have been illiquid and hence I can't see why they would need to deliberately dip into the customer accounts and all go to jail for it.
Liquidity wise, with the 1.3B from the line of credit and the "missing" 600M form customer accounts, there's almost 2B in short term funds versus the European debt position creating a demand for long single digit 100Ms.
All of this seems very consistent with the claim that the hole in their books was mostly about not counting 2B at JPM, with 600M of customer money in that 2B.
Of course, there could be some sort of massive 2B fraud thing happening but the headline stories about what's not that big a Euro debt position can't possibly explain things, so it seems more likely they were bankrupt more in the sense of "no money, no way to make money going forward" than in the sense of "we need 600M by tomorrow"
Thoughts?
Latest news is that only accounts with positions were moved. Accounts that are all cash remain frozen.
"Under a court order in the bankruptcy case, no funds or collateral not backing futures positions can be transferred to another futures broker."
http://www.businessweek.com/news/20...frozen-money-shows-failure-of-safeguards.html
"Under a court order in the bankruptcy case, no funds or collateral not backing futures positions can be transferred to another futures broker."
http://www.businessweek.com/news/20...frozen-money-shows-failure-of-safeguards.html
From the previous article:
James W. Giddens, the trustee liquidating the MF Global brokerage, froze 150,000 customer accounts on Oct. 31, including 50,000 commodities accounts that he aims to transfer to other futures brokers. Customers will hear from their future brokers when the transfers are made, the trustee said in a Nov. 3 statement. The trustee and his team will be working through the weekend to complete bulk transfers, and will probably transfer individual accounts next week, Giddens said.
Don't get the 'probably'. Just do it.
James W. Giddens, the trustee liquidating the MF Global brokerage, froze 150,000 customer accounts on Oct. 31, including 50,000 commodities accounts that he aims to transfer to other futures brokers. Customers will hear from their future brokers when the transfers are made, the trustee said in a Nov. 3 statement. The trustee and his team will be working through the weekend to complete bulk transfers, and will probably transfer individual accounts next week, Giddens said.
Don't get the 'probably'. Just do it.