DealBook Left in Limbo MF Global Is Suspended From Trading

Post on: 2011-11-02 By: admin

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October 31, 2011, 10:00 am
Left in Limbo, MF Global Is Suspended From Trading
By MICHAEL J. DE LA MERCED
As investors await any word about MF Global‘s fate, the brokerage firm was hanging in limbo on Monday morning.
Shares of the firm were halted for trading early on Monday, pending news. Its parent company was expected to file for bankruptcy protection, while selling some assets to the Interactive Brokers Group. It is unclear what was behind the delay.
MF Global Prepares to File for BankruptcyEuropean Debt Threatens Firm
The Federal Reserve Bank of New York said that it had suspended doing any business with MF Global until the firm “is fully capable of discharging the responsibilities set out in the New York Fed’s policy.”
MF Global is a primary dealer, meaning that it is one of 22 firms allowed to trade directly with the Fed and make a market in securities like Treasury notes.
Soon afterward, major exchanges where MF Global does business said that they had suspended the firm from guaranteeing client trades. The IntercontinentalExchange, for example, said that the firm’s clients should be limited to trading for liquidation only.
ICE added:
In addition, and until further notice, the Exchange will no longer recognize MF Global or any of its divisions, including the Pioneer Division, as a guarantor for purposes of floor trading privileges. Accordingly, floor brokers and traders guaranteed by MF Global or its divisions may not access the trading floor. The foregoing actions have been taken based on circumstances regarding the financial condition of MF Global.
The CME Group has also suspended MF Global from trading. Here’s the full statement from the echange:
Effective immediately, and until further notice, CME’s Emergency Financial Committee, in accordance with rule 975, is limiting all trading for customers of MF Global for liquidation only.
In addition, and 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. Accordingly, floor brokers and traders guaranteed by MF Global or its divisions may not access the trading floor.The foregoing actions have been taken based on circumstances regarding the financial condition of MF Global.
CME Clearing will process any transfers at the last settlement price at the request of customers.Such positions will need to be re-margined at transferee firm.Customers wishing to execute a liquidating trade should contact MF Global.
A representative for MF Global was not immediately available for comment.
TagsCME Group, Federal Reserve Bank of New York, Interactive Brokers, IntercontinentalExchange, MF Global
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