Refco eh, well surprise surprise..
100% upside take with 0% extreme loss risk?! Where do I sign up?
Rogue trader cost MF Global $142M
- Thread starter crgarcia
- Start date
Before discussing whether MF is in hot water or not, it would be best to specify what he did.
Did he exceed his credit limits and margins limits imposed by his employer or those imposed by the exchange?
To me that's not clear at all.
Normally each trader has rules to follow imposed by his employer, and also rules imposed by the exchange.
Was this trader, as well as the french trader from SG, holding a university degree? Because that would prove that, even at that level, there are idiots as well. I always link these kind of events to the quants that should be the best traders and outperforming all the others. At least according to some mythes. Kerviel as a highly educated trader did indeed outperform the market, it was only a pity that the return was preceeded by a minus sign.
I agree the position was short.. but no one and I mean no one is in such a hurry to cover that large of a position.. why would you cost yourself so much slippage.. the main problem was the order went out market and should have been LIMIT.. the guy would have lost 70 million instead of 140 million.. even thoug hit might have taken awhile to get filled..
It was unclear if the price jump triggered Mr Dooley's losses but traders said he was betting on falling wheat prices. A Chicago-based trader said Mr Dooley shorted the market - bets on falling wheat prices - "all night with around 12,000-14,000 contracts, so that accounted for the crazy action we saw" on the wheat market.
burn shorts burn
burn shorts burn
Mr Dooley, a former Refco trader who joined MF Global in November 2005, racked up the losses trading in his personal account.
Unlike other customers, he was allowed to exceed normal buying-power controls because the company had raised limits for internal traders on certain desks.
That Mr Dooley was trading in his own account - rather than in the firm's account or one belonging to a client - suggests his motivation may have been personal gain. "Had he profited, it would have been his own profit but because he made a loss, we are responsible for that because we're a clearing member," said Diana DeSocio, for MF Global.
Who is the company, his bermuda outfit or MF.
Refco, say no more. And yes sign me up, I would like to keep my small winnings while any massive multi million dollar losses are for the clearing house, good deal. One article said they (again who is they) fired him and that he was a registered rep, was he a prop trader for MF. I must know!!
You must be new to the world of commodities, eh?
MF Global is based in Bermuda.
They also have offices in London, NYC, Paris, Mumbai, Singapore, Sydney, Toronto, Tokya, Hong Kong, Tapei, and Dubai.
The company was started by James Man in London in 1783. It was renamed in 1869 to E D & F MAN after his two grandsons, Edward Desborough Man and Frederick Man.
MF Global separated from Man Group, PLC via an IPO in 2007 and the shares of MF Global are listed on the NYSE. (symbol: MF ).
ED&F Man entered the U.S. market in 1971. Along the way, they bought out Geldermann in '94, Tulletts in '99, First American Discount in '00, GNI in '02, and Refco and Lind-Waldock in '05.
They were the #1 clearing firm on the floor of the CBOT, CME, and Comex the first 9 months of 2007. On NYMEX, they were #2.
As is usually the case, the clearing firm is on the hook for the loss.
http://www.mfglobal.com/Pages/default.aspx
MF is probably a great buy down here.
The action in the commodities markets will ensure that they continue to do huge clearing volume, despite today's S&P downgrade from BBB+ to BBB.
Six of the company's executive officers bought roughly 180,000 shares of stock today. That comes to $3 million.
Closed at $17.55
-3.64 on 30 million shares. ( traded as low as $14.00 intra-day )
:eek:
The action in the commodities markets will ensure that they continue to do huge clearing volume, despite today's S&P downgrade from BBB+ to BBB.
Six of the company's executive officers bought roughly 180,000 shares of stock today. That comes to $3 million.
Closed at $17.55
-3.64 on 30 million shares. ( traded as low as $14.00 intra-day )
:eek: