Discussion
MF Global has filed for Chapter 11 bankrupty protection in New York (Frankfurt: A0DKRK - news) , after the scale of its bets on European debt sent its shares and bonds tumbling.
The futures brokerage, which was spun out of the British hedge fund Man Group (LSE: EMG.L - news) in 2007, employs more than 2,000 people, about 700 of them in London at its Canary Wharf office.
MF Global, headed by former New Jersey Governor and Goldman Sachs (NYSE: GS - news) executive Jon Corzine, had been trying to strike a deal to sell some assets to Interactive Brokers Group, but talks fell apart earlier today, Reuters reported.
So is the loss of this company going to have any long/medium term repercussions?
The futures brokerage, which was spun out of the British hedge fund Man Group (LSE: EMG.L - news) in 2007, employs more than 2,000 people, about 700 of them in London at its Canary Wharf office.
MF Global, headed by former New Jersey Governor and Goldman Sachs (NYSE: GS - news) executive Jon Corzine, had been trying to strike a deal to sell some assets to Interactive Brokers Group, but talks fell apart earlier today, Reuters reported.
So is the loss of this company going to have any long/medium term repercussions?
There will be an awful lot of people who won't be finding replacement work. The London op had become very fat and lazy with a lot of people who just didn't understand the modern world.
They were shutting down the spread and CFD accounts today so not even attempting to retain those clients. I assume this is mostly because the positions are either capital intensive on the hedge or openly exposed on the book. Plus, no US buyer of the retail arm will want those products and be very wary of them. It was also peanuts nowadays as very few people used MF.
Great shame and while it was somewhat an ailing model it's been killed by the incompetance of one cretin at the top.
On the institutional side it was a massive player and there will be a fair few firms interested in taking control of the flows they commanded, but it is a very fluid market and one wonders if there will be much flow left as much will have migrated to back up counterparties within hours.
Very sad.
Maybe they'll take my bid for the GNI brand more favourably now?
They were shutting down the spread and CFD accounts today so not even attempting to retain those clients. I assume this is mostly because the positions are either capital intensive on the hedge or openly exposed on the book. Plus, no US buyer of the retail arm will want those products and be very wary of them. It was also peanuts nowadays as very few people used MF.
Great shame and while it was somewhat an ailing model it's been killed by the incompetance of one cretin at the top.
On the institutional side it was a massive player and there will be a fair few firms interested in taking control of the flows they commanded, but it is a very fluid market and one wonders if there will be much flow left as much will have migrated to back up counterparties within hours.
Very sad.
Maybe they'll take my bid for the GNI brand more favourably now?
They've been CHAPSing money all day to UK clients.
The only risk was that for the last couple of years they have been pushing a lot of clients to opt up to Pro status so as to de seg funds and run them on their own balance sheet.
So far I've not heard any issues with getting non seg funds out.
Only a small number of the clients are retail and the institutional players are among the big players in the market. The chairman won't be working again but most of the other senior management will and many of them are new so weren't part of the massive rape of the late 90s into around 2008.
I think that the changes that are being made now only make sense if they have pretty much already sold the business. I suspect a deal was done over the weekend, the fall guy appointed and unwanted books shut down today. Chap 11 works well for halting the stock run and any debt financing while the fine details are thrashed out.
The only risk was that for the last couple of years they have been pushing a lot of clients to opt up to Pro status so as to de seg funds and run them on their own balance sheet.
So far I've not heard any issues with getting non seg funds out.
Only a small number of the clients are retail and the institutional players are among the big players in the market. The chairman won't be working again but most of the other senior management will and many of them are new so weren't part of the massive rape of the late 90s into around 2008.
I think that the changes that are being made now only make sense if they have pretty much already sold the business. I suspect a deal was done over the weekend, the fall guy appointed and unwanted books shut down today. Chap 11 works well for halting the stock run and any debt financing while the fine details are thrashed out.
k as they've have many, many $100m's out in wages and bonuses in the last few years. Probably in the $Bn's......davepoth said:
Could it be the first domino though? Serious question, I know nothing about this.
I'm sure some institutions will hit difficulties but the MFG issue is an odd one. They've been losing money but not enough to cause any issues, what happened was the boss took enormous prop positions on Euro bonds, about 6bln worth. Now, MF a couple of years ago was just a brokerage having been spun out from Man Group, but Corzine when he joined decided they should become effectively an investment bank, he wanted to create another Goldmans. So, he started up a prop desk and built up this massive position. The credit rating agencies took a look at this position and downgraded the firm and this triggered a whole series of membership failures at various global exchanges which due to the breach suspended MF from accessing their markets.It's a little bit of an odd one as the positions are good at present but the firm has been killed bue to its breaches.
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