Here Come The "Unintended Consequences": Stock Futures Liquidity Dries Up Post MF Bankruptcy

Tyler Durden's picture

Just like with Lehman, when it took 3 days for the full consequences of the bankruptcy to manifest themselves in the form of a complete freeze of money markets, so too now we are starting to see the same phenomenon following the blow up of one of the world's largest exchanges. The first observation comes courtesy of Dow Jones which informs us that the MF Bankruptcy has "devastated stock futures liquidity." Specifically, "MF Global's departure from the clearing scene has "devastated liquidity" in stock index futures, a long-time CME floor broker said. He estimated about a third of the pit population is missing. On a normal day, six or seven filling brokers stand on the top rail. That's down to three. In the rate futures markets, another veteran broker sees "marginal" impact because MF's business in Eurodollar and Treasurys is not as large as Newedge USA and Goldman Sachs. "Whatever the effect, it will be extremely short- term in nature because accounts will find new clearing firms and executing brokers quickly," the rate futures broker said." One can only hope the futures broker is right. In the meantime, the CME's margin drop in Dow related margins from last week probably could not have come at a better time.

h/t London Dude Trader

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GeneMarchbanks's picture

Butterfly ... Brazil. CME rescue aside, we'll need some volume pronto.

Triggernometry's picture

Nothing but a transitory disco inferno.

Ahmeexnal's picture

Smart money knew Brazil was the next "miracle boy", just as Ireland, Spain and Greece had been years ago, when they rode their own bubble waves.

Brazil will crash too. It will be worse. Idiots acclaim Lula for lifting millions of brazilians from poverty to middle class. It was all done on debt. Yes, they were poor, but owed nothing to no one. Now all their newly found wealth is spoken for: cable tv, cellphone rent, paying for overpriced (bubble) dwelling, paying for new car/60 inch 3D plasma TV/swimming pool/trips abroad/credit cards.

Lula should be hanged.  As a lackey to the power elite, he threw the brazilian people under the bus.  Now you understand why you can't trust a marxist?  They all pretend to act "for the common good". In reality, they screw the population, to the benefit of the power elite.

FeralSerf's picture

In reality, who can you screw if not the population? We're all livestock. Our purpose is to provide sustenance and luxury to TPTB. Brazilians are no different than Americans or Europeans or Chinese in that regard. Lulu is their PTB's boy. They own him, not "the population".

If anyone is to be thrown to the wolves, it's going to be some of the sheep, not Lulu as long as he's a good boy. Lulu knows this.

Joe Davola's picture

cable tv, cellphone rent, paying for overpriced (bubble) dwelling, paying for new car/60 inch 3D plasma TV/swimming pool/trips abroad/credit cards


Is this still in reference to Brazil?


Now you understand why you can't trust a marxist?  They all pretend to act "for the common good". In reality, they screw the population, to the benefit of the power elite.


OK, now I got it.  Brazil all along - O can't act.

Buck Johnson's picture

You're correct, I'm glad someone brought Brazil up.  That country is riding a debt wave that is expanding exponentially.  If you read many of the articles that have been coming out of the country, it's not sounding so the place to be anymore.  Inflation of everything is rampant and everyone is using debt to move up in status.


s2man's picture

A butterfly?  I thought the next crash will be caused by a trader's fart in uzbekistan...

Darth..Putter's picture

Uhm...I just farted.  Sorry guys.

Scisco's picture

There is more content in that article than any Euro headline for the last few weeks.

I_Rowboat's picture

Damn these weather events!

Sudden Debt's picture



Yeah, I just knew they breeze from yesterday wasn't going to pass without consequences....

Today, I even noticed that the threes are losing their leaves!! THEIR LEAVES FOR GOD'S SAKE!!!!

Better hang on to your boots...


ziggy59's picture

What BS!. They are probably away from desk at a Halloween party and trick or treating

digalert's picture

With MF pulling this Monday morning filing and the CME lockout fiatsco. Monday mornings from here on could get rather exciting. got popcorn

lolmao500's picture

Remember this?

USA was 3 hrs away from Economic, Political Collapse in September 2008

According to Rep. Paul Kanjorski (D) (PA-11), in mid-September of 2008, the United States of America came just three hours away from the collapse of the entire economy. In a span of 2 hours, $550 billion was drawn out of money market accounts in an electronic run on the banks.

Rep. Kanjorski: "It would have been the end of our economic system and our political system as we know it."

GeneMarchbanks's picture

It matters not because we have:

SUPER CONSUMER! To the rescue...

Bloomberg headline:

Consumers ’Scared to Death’ But Still Spending
Snidley Whipsnae's picture

"Rep. Kanjorski: "It would have been the end of our economic system and our political system as we know it."

Since 2008? I suppose Kanjorski hasn't noticed but the economic system as I knew it has ended... and it was prior to 2008!

Rockfish's picture

Damn, so close yet so far.

earleflorida's picture

yep,... kanjorski, and dodd reaction to the mighty, 'hank-the shank's, sudden epithany' - my god,... someone just sucked all the oxygen out of the room -

all the while the congressional finance committee's, wined, and dined that evening, in a smoke-filled banker's den  

the horror

happy holloween

NOTW777's picture

how does this impact the robots?

hope it throws a wrench in their systems

Miss Expectations's picture

On Halloween, I think the robots ignore "Scared" "Death" "Demons" "Hell" "Evil" "Burn" "Trick" "Day of the Dead" as a matter of pure cautionary  programing.  If these words hit the headlines tomorrow, it may be a different matter entirely.

Unprepared's picture



If today = date(Halloween)

  then ignore headline with keyword in #negativelist#

  else today := Halloween

end if;

Hephasteus's picture

I regularly write. Mass muder those fucking python developers and burn lisp programers just to scare them. And then email it to everybody.

Nvidia gpu's bumpcracking is just a cover story. It's me scaring them to death.

Josh Randall's picture

First you get the sugar, then you get the power, then you get the women

jomama's picture


Deadpool's picture

maybe you saw this earlier: 35.5%:

These are the largest holders of MF Global common stock as of Sept. 30, according to MF Global’s documents filed with a bankruptcy court:

1) Fidelity funds, 13.9 million shares or 8.44% of common stock

2) Guardian Life Insurance Co., 12.9 million common shares, or 7.8%

3) Fine Capital Partners, 21.5 million shares, 7.37%

4) Cadian Capital Management, 10.2 million shares, 6.17%

5) TIAA-CREF, 9.5 million shares, 5.77%

Bloomberg News
Chris Flowers

Chris Flowers: The private-equity investor often is among the first calls for ailing financial firms in need of a lifeline. Flowers’s firm, J.C. Flowers, in 2008 agreed to help MF Global refinance debt, after MF Global suffered a $141 million charge from unauthorized wheat trading.

J.C. Flowers committed to invest up to $300 million in MF Global in return for preferred stock that pays a hefty dividend. The preferred stock converts to common shares at a price of $12.50, well above MF Global’s latest share price. Flowers’s stake also is likely worthless, barring a large sale or other rescue of MF Global.

Jon Corzine: Corzine swept in last year to lead MF Global, and he had ambitions to remake the company in the image of his former company, Goldman Sachs. Instead, Corzine’s optimism about investing MF Global’s money in European sovereign debt — over the objections of others, according to today’s Wall Street Journal story — helped imperil the firm.

Over the summer, bond investors apparently thought highly enough of Corzine that they demanded a richer payout from MF Global if Corzine left the firm for a high-ranking government job. Today, such a “key man” clause seems like an antique.

Apart from a dent to his reputation, Corzine also stands to lose financially from the MF Global bankruptcy filing. Corzine’s compensation last year was $14.2 million, including stock options MF Global valued at $11.1 million. Those options pay off at a share price of $9.25, which means they are very likely to be worthless now.

Belarus's picture

I just love that the DAZ and CAC closed at its lows, while the U.S. does what it always does; the majical ramp. 

junkyardjack's picture

Don't worry there's only three brokers but the entire show is still run by computers and they shall churn away

tickhound's picture

Cnbs and Santelli playing follow the Tylers.  Santelli... "CME empty, awfully quiet, liquidity damaged." 

Some finger pointing... Followed by some verbal reassurances, of course. 

Segment ended with picture of Corzine and Obama with hands raised.  Barry's quite the kiss of death.

Cursive's picture

Whatever the effect, it will be extremely short- term in nature because accounts will find new clearing firms and executing brokers quickly," the rate futures broker said." 


Forget the accounts, where's the money?  Why, Money Heaven, of course.  MF Global's money has been magically transformed into an i-pad somewhere in the Mediterranean and that bill ain't ever getting paid.  Even if the clearing business doesn't affect the custodial accounts, more Money Souls have been redeemed this Hallow's Eve and there's more to come before Christmas.

Deadpool's picture

Until further notice, CME Group will no longer recognize MF Global or any of its divisions as a guarantor for purposes of floor trading privileges,” the Chicago-based exchange owner said in an e-mailed statement. Intercontinental Exchange limited MF Global from its U.S. and European exchanges as well its energy over-the-counter clearing business, Lee Underwood, a spokesman for the Atlanta-based company, said in an e-mail.

MF Global’s largest unsecured creditors include JPMorgan Chase Bank NA, as trustee for holders of $1.2 billion in debt, and Deutsche Bank Trust Co. as trustee for holders of $690 million in debt.

The company’s $325 million of 6.25 percent bonds, issued at par in August, fell 10.5 cents to 39.5 cents on the dollar at 10:35 a.m. in New York, for a yield of 31.6 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. Its shares, which were halted today, fell 16 percent to $1.20 on Oct. 28 after reaching a low of 99 cents.

LawsofPhysics's picture

Perfect.  Chase the humans out and turn the bots back on.  Winning (at leat for those behind the bots).

Unprepared's picture

But I though MF Doom was properly hedged

oceanview76's picture

We might be in the green by the end of the day if this trend holds through.  It could quite easily be spun by saying that the market response to MF Global being allowed to enter bankruptcy and not being bailed out by the Gov, is very positive.

Deadpool's picture

that, or it's last day of month and da bonus must be made.

NotApplicable's picture

Stock futures liquidity dries up?

Is there not a bot out there that can save us?

ivant's picture

not today my friend. they all clear through MF GLOBAL :P

JR's picture

The crisis deepens...

Bill Black was asked what caused this crisis, how he was able to put so many bankers involved in the S&L crisis in jail, and how the S&L crisis compares to the current crisis.  

Bill Black @ #occupywallstreet on Arresting Banksters

(Black was part of an agency that did its part by making more than 10,000 criminal referrals in the S&L crisis. The FBI and Justice Department put more than 1000 elite bankers in jail, convicted with a 90 percent conviction rate and most of these were in the top 100 cases – so they were the most elite frauds in the crisis.  All this happened from about 1989 to1993.)

Here’s what Black personally thinks about the crisis we’re in now (rough video translation):

First, this economic crisis is 70 times larger in terms of its losses.

Second, it was driven by even a bigger wave of fraud than the S&L crisis. In the S&L crisis they found that in the typical large failure, fraud was invariably present.

Then, we went to the whole Enron era; those were all frauds as well.

Then we get to this era; 90 percent of liars’ loans are fraudulent; liars’ loans by 2006 are one out of every 3 loans made – roughly 2 million fraudulent loans, and we find that it was the lenders who put the lie in the liars’ loans. 

Next part: That’s what hyper-inflated the bubble.  When you get a really huge bubble, when it collapses you get the great recessions and depressions. That’s what drove this crisis, that’s what made the criminal bankers rich and that’s what cost us 10 million American jobs and 11 trillion dollars - a trillion is a 1000 billion - $11 trillion lost versus a $150 billion in the S&L loan crisis.

In this crisis (as I told you, we made over 10,000 criminal referrals in the S&L crisis which was 1/70th as big), in this crisis zero criminal referrals by the same agency, therefore zero convictions and only as recently as 2007, 120 FBI nationwide supposed to deal with a million frauds, whereas we had a 1000 FBI agents just on the S&L crisis, which again was 1/70th the size.


If you want to fix the problem you’ve got to start always by fixing the regulators.  You can’t fire Bernanke…  The President doesn’t have that power, but he can ask for his resignation. And you’ve got to fire Geithner and Holder…  Bernanke and Geithner were promoted or re upped because they were failures as financial regulators and, indeed, they were the most abject failures in the history of regulators.

October 31, 2011

Deadpool's picture


This table lists the top donors to this candidate

University of California $1,648,685 Goldman Sachs $1,013,091 Harvard University $878,164 Microsoft Corp $852,167 Google Inc $814,540 JPMorgan Chase & Co $808,799 Citigroup Inc $736,771 Time Warner $624,618 Sidley Austin LLP $600,298 Stanford University $595,716 National Amusements Inc $563,798 WilmerHale LLP $550,668 Columbia University $547,852 Skadden, Arps et al $543,539 UBS AG $532,674 IBM Corp $532,372 General Electric $529,855 US Government $513,308 Morgan Stanley $512,232 Latham & Watkins $503,295
ziggy59's picture

Get in there Mortimor, turn on those f#*%ing bots and sell, sell, sell!

Let them eat iPads's picture

No worries, China will step in and do something.

ChiefJohnRutledge's picture

8,505 SP cars traded on Friday in open-outrcry according to the CME daily volume report.

Today so far it is around 1,500 cars.    So yes, volume has dried up.   But very few players use the big SP contract anyway, which is understandable given that it trades fewer contracts per day than the e-mini oil contract.    The lack of liquidity is why I left the pit 10 years ago.

As a CME shareholder, I say get rid of all the pits and turn 141 W. Jackson and 20 S. Wacker into hotels.   At this rate, they aren't generating enough income to keep the lights on in the building.

kevinearick's picture

Dynamic String Allocation

Sometimes you blow up the chemistry lab. Don’t worry about it. You can’t do any worse than the proprietors. Just don’t make the same mistake twice.

So, the event horizons replicate DC order, and the looking glass is a frequency of frequencies, AC disorderly flux. Once you eliminate your own meter bias, you can dynamically allocate strings, into event horizons or other transformation effects. Watch coastal flocks sometime. A single-cell amoeba can incubate replication.

A black hole is a filter of filters, event horizon gap contact sets, in a resonant feedback loop, like gears in a clock. The universe, as a black hole of black holes, is a dynamic allocation system. Order is a hammer looking for a nail. Speed depends upon the frame of reference, relativity.

The speed of your watch depends upon your location. You have a generator connected to a conductor that tapers to the moon. What is the pressure at each terminal? You have a growing city on an expanding disc on a fulcrum. What is the ratio of city growth to disc expansion? Why does time speed tend to 0 in the nucleus? What is the effect of delay mechanisms? Why aren’t the Fed’s levers working?

If you watch, the flock moves in waves of multiple dimensions, depending on a current of multiple dimensions, which the single predator cannot compute. Like the ice rink, a single decision, with an input echo and an output echo, determines the direction and flow of the skaters, in and out of resonance, with resulting downstream decisions.

That’s the travelling salesman problem in a nutshell. The animal trail becomes the wagon trail becomes the road becomes the highway, with increasing efficiency, until system threshold reaches the tipping point and time accelerates on the virus, in a positive feedback loop, due to its own efficiency.

Because each event horizon (click) locks out alternative perceptions, they cannot see their own demise until the tipping point is past. The congressional districting and fiscal policy feedback loop is an extremely efficient make-work jobs program, with inelasticity parading as elasticity, extending the conductor past the moon, on bridges to nowhere, through State and local government, resulting in a complex of bridges looking for an exit and all choosing the same entry abutment, producing the black hole.

Given a choice between socialism (D) and crony capitalism (R), which form the “symbiotic” black hole, the answer is to build something new, in a different dimension until complete.

Government is contracting faster than it can issue debt to catch itself, which is exactly what you want. Now comes the cries from the serious heroin addicts, the Johnson and Johnsons, as their REIT inverse pyramids crumble and they have to compete directly with the M/B complex for a place on the remaining tit, as all the leaves and branches hiding the legal misdirection fall with the next storm.

Is there a library board left that has not replaced all the librarians with feminists and installed spyware accordingly? Before they are done, they will all be $10/hr security guards spying on each other, and bankruptcy will be outlawed from bottom to top. They are already operating by executive order.

If you balance the disc(s) with an increasingly effective fulcrum/psychology, negative feedback with pulse moderation, cognitive threshold ignition will occur at the correct pressure automatically. The step back slows time within the looking glass and accelerates it through the event horizons, creating the necessary gap to allocate strings into the new event horizon(s).

Backlash appears instantaneous on the remaining event horizons, but it is quite manageable coming out of the looking glass. The chicken and the egg appear simultaneously, on a circuit issued for the occasion.

There is no escape for civil marriage without event horizon turnover. All of its (un)intended consequences are being revealed across the board globally, as the proprietors scurry for cover, with the tide receding faster, leaving only the authority for hiring and firing to blame. They cannot tolerate mistakes, but must make mistakes to learn.

Likewise, the global IC chip has reached its final event horizon, no one is coming to save the little boy who cried wolf, and the bully is now looking square in the eye of the black wolf. Patience and persistence will now determine which fish catalyzes the first string allocation. The resulting echo will propel the echo of echoes.

The manufactured majority is double-minded; they say one thing and do another, distilling out those who do by example. Intelligent children learn by example, to make new mistakes, to reveal, and the community that prospers over time is the one that produces the necessary NPV window, by rewarding families that DO over time, which requires effective generational relationships. Time distills perception. The universe thinks.

A maintenance architect temporarily, strategically, relieves organizational anxiety to widen the event horizon, to pull the anxiety anchor forward, to any example of successful process, leaving those in the organization to choose, the future or the past, successful adaptation or failed replication. They most frequently choose failure. It’s part of the job; get used to it.

It is the double-minded authority figure that needs a plan. God granted choice. THERE IS NO F***ING PLAN. There is order out of Chaos. Agree on one and learn. A job is a stepping stone to a business. Circulate accordingly. Strings are temporarily allotted stepping stones. Don’t build a permanent structure on a stepping stone and expect to be happy with the outcome.

The gap is adjusted with double-minded anxiety, which is a function of the ratio between civil and real marriage. Civil contracts are made to be broken. When applied to marriage, they are assembly lines for stupid, and stupid gets mad when the owner of Park Place ends up with all the money, after voluntarily entering the ponzi casino, selling their kids for the ticket. That’s why we are going to all the trouble to show kids globally how stupid the casino is.

Go ahead, prove me wrong.

HeNateMe's picture

Really trying to make sense of your posting.  I can understand a little of it but it seems full of information that I can yet translate.  Any way you can dumb it down for me a little bit so I can understand?  Or say in different terms?


kevinearick's picture

There are many different groups getting information off my posts.

Some are interested in the fusion/fission reactor. Others are interested in the unified field equation, community development, education, investing, currency exchange, etc.

what is your interest?

will look for you and get back to you later.

HeNateMe's picture

Quantum Physics, but more specifically, being able to consciously alter reality.  Maybe skipping over to a different but parallel dimension, etc.  Anything along those lines or anything that can help me put Enlightenment to bed.

kevinearick's picture

I solve practical problems, specifically in the Open Source operating system root, and provide timing for branch developers, but you are interested in the "meter effect," that is you cannot escape from a distribution within which you are a participant. You want to escape from the black hole, from within the black hole, prisoners dilemma. For example, many assume that their senses are trustworthy, so they fill their entire database with the results and then try to escape. The entire point of OS is to operate in a different dimension, to deliver parallel event horizons.

What, I think, you really want, is propulsion out, which is backlash, but I'm not much of a philosopher. Reality is what you agree to accept as order. The more in agreement, the greater the gravity. Other critters live in parallel realities, for example, and not because they are stupid.

Hephasteus's picture

I'm interested in the part where complexity runs up against organizational boundries and problems it can't solve and then goes nuts.

Like say it's 1920 and IBM invents the tabulating machine and sets off with the solved complexity problem of how to run a social security ponzi scheme. It doesn't care about the end. It only cares about making the tabulating machines and training the operators. And doing business in 70 countries which most americans would get shot and assraped in.

Until you learn that complexity is all about using and abusing people. You'll be forever confounded by it. The person who is dilligently and honestly trying to solve complexities problems are simply working for the universes advertising agency as a useful idiot.

kevinearick's picture

So, your saying keep it simple stupid?

I would rather dig ditches than deal with the universities, but sometimes we do things we would rather not, especially where our children are concerned.