MF Global down 60% right now

mokwit · Mar 17, 2008

Quote from Landis82:

It's ALL about the CLEARING FIRM.
They are the "guarantor".

I just had all my money wired out of MF.

If you or I can't meet a loss the exchange makes good our counterparty and then goes to the broker for payment who in turn goes after us the client.

BTW you have NO protection in the event of a big client blow up - all other accounts with a broker can be used to cover the big blowup clients defecit. Theat's right, they use YOUR maney to pay someone elses debt but do not use e'g. Directors assets first. I discovered this not heavily advertised fact throgh having funds withh Refco - I am talking CFTC brokers here.

cannuckboy · Mar 17, 2008

Exactly, i cleared Refco when they blew up. If this starts a 'run' on MAN then it could be all over whether or not there is bad news.

jsmooth · Mar 17, 2008

NMX: it will be interesting to see what the updated bids/offers & membership sales are tomorrow when they get updated

Landis82 · Mar 17, 2008

Quote from mokwit:

If you or I can't meet a loss the exchange makes good our counterparty and then goes to the broker for payment who in turn goes after us the client.

BTW you have NO protection in the event of a big client blow up - all other accounts with a broker can be used to cover the big blowup clients defecit. Theat's right, they use YOUR maney to pay someone elses debt but do not use e'g. Directors assets first. I discovered this not heavily advertised fact throgh having funds withh Refco - I am talking CFTC brokers here.

Trust me, I used to be a commodity floor trader for 10 years. I understand all of the above, AND I had funds at REFCO when they collapsed ( and were absorbed by MF ) and I wired my money out then, too.

Thank you for your concern though.

taclander · Mar 17, 2008

Hmmm, I was going to fill out paperwork to trade with a firm that uses MF for clearing. I'm guessing I may want to wait to see whats going on before I move my account.

DataCruncher · Mar 17, 2008

which firms use MF for clearing? its brutal out there, anything smelling funny is getting taken out to the woodshed

gnome · Mar 17, 2008

Quote from mokwit:

If you or I can't meet a loss the exchange makes good our counterparty and then goes to the broker for payment who in turn goes after us the client.

BTW you have NO protection in the event of a big client blow up - all other accounts with a broker can be used to cover the big blowup clients defecit. Theat's right, they use YOUR maney to pay someone elses debt but do not use e'g. Directors assets first. I discovered this not heavily advertised fact throgh having funds withh Refco - I am talking CFTC brokers here.

Don't they have a capital account which is to be "consumed" before going after client assets?

Daal · Mar 17, 2008

Quote from mokwit:

BTW you have NO protection in the event of a big client blow up - all other accounts with a broker can be used to cover the big blowup clients defecit. Theat's right, they use YOUR maney to pay someone elses debt but do not use e'g. Directors assets first. I discovered this not heavily advertised fact throgh having funds withh Refco - I am talking CFTC brokers here.

than I think IB customers are fine because they put the funds on a securities account, can you confirm this

cannuckboy · Mar 17, 2008

do you mean a segregated account?

Bernard111 · Mar 17, 2008

Quote from gnome:

Don't they have a capital account which is to be "consumed" before going after client assets?

Do you mean the Excess nET Capital -- defined as 'adjusted net capital, less the firm's net
capital requirement' ?
http://www.cftc.gov/marketreports/financialdataforfcms/index.htm