The received wisdom that no-one had ever lost money from an FCM going bust on the CME market is no longer true, and long standing assumptions need to be looked at with fresh eyes says Dan Barnes.
Clients of the futures, commodities and equities broker MF
Global are still trying to recover funds and momentum,
following the clearing broker’s bankruptcy filing
on October 31 2011, in a situation that was reminiscent of the
Lehman Brothers collapse of September 2008.
The big difference is the missing customer money, identified
by the US court appointed administrator James Giddens as a
"$1.6 billion gap between the
value of the Trustee’s estimate of potentially
allowable commodities claims and the assets that are currently
under the Trustee’s control".
"In the futures market, which is pretty insular, there
hasn't been this kind of a shakeup before," says James Gellert,
chairman and chief executive of rating agency Rapid Ratings.
"The impact of MF Global in the futures industry is massive and
unprecedented. Now investors and other dealers are having to
assess risks they didn't think they had to assess before, such
as the counterparties themselves."
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