This page has been archived and commenting is disabled.
The CME acts on MF customer accounts
Interesting development in the MF Global story after the close:
The $300mm is in the form of a guarantee. The objective is to get the Bankruptcy Trustee to release money owed to former MF customers. From the CME release:
"Though CME Clearing does not guarantee FCM-held assets, CME Group is willing to provide a $250 million financial guarantee to the trustee to give the trustee greater latitude to make an interim distribution of cash to customers now, given the monumental task he faces to sort through considerable data and claims in order to complete the MF Global liquidation and make distributions to creditors.”
Some thoughts:
-The amount of “missing” customer money is $600. So the CME is picking up the tab for half of the nut.
.
-This is a glass half full for MF customers. Yes, they are getting half their money back. But my read from this is that this other half is very much at risk.
.
-The CME steps up for $300 large and they don’t have to? Nobody does that. There is more to this offer than meets the eye.
.
-I can’t see how the CME can be held liable for MF customer losses. Therefore the money is an attempt to preserve the integrity of the exchange and to protect its members.
.
-It’s possible that the CME action was done with a gun to their head. Absent a fix (partial or otherwise) a systemic risk was (is) a consequence. The only one who could hold a gun in this discussion is Treasury.
.
-Has anyone noticed that Treasury has been silent on the MF story? I’ve been very surprised at this. It’s long since time that Geithner should have spoken publicly on this important development. The WH wants to steer clear of anything that smells like a bailout. The WH is ignoring its responsibilities.
.
-It’s (again) clear that there is a ton of cash sitting with the Trustee. The reason this money has not been forwarded to customers is that there is a claim against it. I can’t imagine how that can be.
.
-The most likely entity that is claiming the money is JPM. It’s possible that JP is acting on behalf of yet another party, but I doubt that.
.
-That this matter has now gone on for two weekends confirms to me that there are losses outside of MF. What shouldn’t have happened has happened.
.
-Early next week the Trustee will accept or reject the CME deal (I’m sure there are strings). If the Trustee does reject this (its very unusual) then there will be some fallout. If this happens, all of the customer money is at risk.
.
-I’ve thought from the beginning that this had the makings of a Black Swan. I’m not sure that the actions by the CME defuse the risk.
.
-If there is going to be a reaction (capital withdrawals from other brokers, liquidity issues in futures markets), it will be evident on Monday.
.
-If I had an account with a second tier broker I would take the money out. It’s easy to put it back in. It’s a disaster if you can’t take it out.
.
»
- advertisements -
Really, why is Jon Corzine not in jail?
He just followed the script
Mr. SwingForce, Mr. Swingforce: I HAVE THE ANSWER!!!
Because Mr. Corzine is rich and white and because he stole something worth more than a 12-pack of beer. If he had stole a 12-pack from 7-11 he would be in Jail right now getting the Big Sandusky and maybe in 6 months he would get a "trial" that would last maybe 5 minutes where his "public defender" would get him a plea bargain "deal" for only a couple of years more in State Prison getting Big Sanduskys and that would be to send a message to "criminals" that "crime doesn't pay." But Mr. Corzine stole so much he can't go to jail because it wouldn't be right and it would send a bad message to Job Creators. Besides Mr. Corzine has lots of lawyers and since there's no beer there is really no proof that he stole nuthin; the money maybe just kind of disappeared itself!
there is really no proof that Corzine butt-fucks little boys
Don't forget that Corzine is a Democrat. In the U.S. this means the major media outlets will go to the mat for him. By the time the NYTimes, MSNBC, CBS, etc... get through with their coverage of the MFG story, Corzine will be sainted.
Couldn't agree more.
"With the Republicans and the Democrats it's like Tweedle Dee and Tweedle Dumb -- there's not a dime's worth of difference between the two of them." --George Wallace, c. 1968.
George Wallace at least had THAT part right, way back then.
"Excrement stinks, no matter whether it is 'red' or 'blue.'" -Upwising, c. 2011
Because Bernie Madoff is doing penance for him.
He was just following orders. Case dismissed.
full member of The Parasite Club, senior to the shoe-shine boy at the Club, Barrack Obumma
I called it.
The CME cannot afford the stink.
They will make the victims whole.
Probably only those with influence.
Every account above 5 million for exmple, that would cut half of them.
Slightly less than half whole actually.
Bankruptcy trustee should have released all (non-pilfered) customer funds immediately. They're not part of MF's bankruptcy.
The half is just the first offer.
Great scoop, Bruce. Nobody holds a gun to the CME's head. They offered the line because they will absorb it back by way of raising margins. They did a marvelous job at not triggering margin calls when they took in the transferred accounts with missing cash. Brilliant! If they get 50% back for the individual accounts, they will have done more than the regulators, of which there are none. Bravo CME, step up. Corzine should be in jail right now, why is there no mention of his promotion to Trerasury Secretary? At least he should have an office next to Jeff Immelt, no?
par for the ponz
payback 15% of what you stole
voila
bullshit there isn't a gun to the CME's head. those are called "banks"--and "that's their liquidity" not the CME's.
Yeah, but I like Rosenbergs comment -- there's seldom one cockroach in a messy kitchen..
I might add that if you don't take care of the ones that are in the open, you'll lose a lot of customers.
Another little interesting story after the close. Check out today's BAC filing. It would seem that the Fed is now having thoughts about nixing a certain liability move BAC made recently. The ML unit in BAC has 93bil in cash and assets and 75 Trillion in derivative exposure. Also noted, another downgrade (think MFG) would require them to post an additional 6 bil in collateral. Somebody get good ole Uncle Warren on the phone...quick.
Thanks i almost forgot that swan. Maybe thats the purpose of MF going down?
Bravo Bruce. This is not normal behavior from TPTB. Major cover-up or just major losses? Either way, the MSM doesn't care.
The silence from TPTB is deafining and telling...
They are running out of fingers to stick in the dyke! I am not sure why anyone would leave money with these sorts of brokers?
Rosie will not be happy!
"Who would wanna' stick their finger in a dyke ?"
-- Tony Montana
Margin requires that one leaves money. Maybe if the CME does not come up with it's "guarantee" then margin calls will be coming in on Monday, then collateral must be sold ... except Corzine and Crew has obviously pawned that too to extract their bonusses ... and open positions liqudated. Could be a nice smashup.
both theft and envy are different sides of the same coin.
http://expose2.wordpress.com
"The $300mm is in the form of a guarantee."
Sounds like the CME is trying to pull the same scam as the Euro Zone.. "guarantees".. hot air to get someone else to pony up real capital.
Time for someone to lay a margin call on the CME.
Yes you are exactly right. But in this case, the CME is drawing money into client's accounts on their behalf, since there is no regulatory or criminal oversight in this case. CME is the hero here, Corzine is free, he POOFED $ Billions and not a word on his whereabouts, no criminal charges, no margin calls, markets go up 2 days in a row SPX-OIL-EURO wtf?
Market went up after Bear Stearns too... I seriously doubt this is a one off event.