Lau Fook Kong/The Straits Times, via ReutersIn Singapore, MF Global’s investors clamored last week to withdraw funds and close accounts.7:43 p.m. | Updated
For MF Global customers, this past weekend provided both some good news and bad news.
The good: most of their accounts were transferred to new homes. The bad: these clients will have to post additional money to maintain their trading positions, according to notices sent out over the weekend.
In one such notice, R.J. O’Brien, one of the firms that had taken in MF Global customers, informed new clients that their accounts had been transferred with about 75 percent of the required margin needed to remain in good standing.
These customers must wire additional money to R.J. O’Brien by the end of business on Monday to support their trades. Otherwise, they face having their trading positions liquidated.
“Every former MF Global account faces a margin call,” the notice said. “No excess equity was transferred.”
The notices were sent out as the CME Group, the exchange where MF Global did much business, and the trustee overseeing the liquidation of the failed firm’s brokerage managed to transfer many client funds to new homes this past weekend. (Those clients whose accounts were not transferred over the weekend have had their positions liquidated.)
The process is meant to finally allow MF Global customers to again regain access to their accounts.
Such margin calls were expected. In his emergency request to move client funds last week, the MF Global brokerage’s trustee, James W. Giddens, sought initially to transfer only 60 cents of every dollar in a customer account.
That is because some $600 million in customer money still cannot be accounted for, according to people briefed on the search. As more customer money is found, clients will eventually receive additional money.
A spokesman for Mr. Giddens said in a statement that because of the shortfall, the trustee “had to hold back assets in order to meet his obligations to identify and marshal assets to best satisfy customer claims and to maximize the estate for all stakeholders.”
To provide some help, CME announced on Saturday that it had temporarily eased margin requirements for these now-former MF Global customers.
“This is a short-term accommodation to maintain market integrity and provide temporary relief to customers whose accounts have been disrupted by this event,” the exchange said in its press release.
Azam Ahmed contributed reporting.