Treacherous Wheat

General discussions about futures.
Post Reply
stamo
Roundtable Knight
Roundtable Knight
Posts: 522
Joined: Tue Mar 13, 2007 5:27 pm

Treacherous Wheat

Post by stamo » Thu Feb 28, 2008 8:35 am

MF Global Announces $141.5 Million Bad Debt Provision

Company Remains Well-Capitalized with No Impact to Client Funds

NEW YORK--(BUSINESS WIRE)--MF Global (NYSE: MF), a leading broker of exchange-traded futures and options, announced that during the early hours of Wednesday morning, February 27, a registered representative in one of its U.S. branch offices, trading in the wheat futures market in his personal account, substantially exceeded his authorized trading limit. The registered representative concerned has been terminated effective immediately.

A failure in one of the company’s retail order entry systems permitted the representative to establish significant positions in his own account which were liquidated later that morning. The unauthorized activity resulted in him incurring a loss of $141.5 million, which the company, as a clearing member, is responsible to settle at the clearinghouse. As a result, the company recorded a bad debt provision for the full amount.

The company believes it has made the appropriate adjustments to its order entry systems to prevent a recurrence of unauthorized trading of this type in the future. In addition, MF Global has engaged a third-party risk technology consultant to review its relevant order entry systems.

Client funds are not at all impacted by this event.

The company’s capital and liquidity position remain strong. The loss represents approximately six percent of the company’s equity, in addition to which it has close to $1.5 billion in undrawn committed credit facilities.

In the company’s fourth fiscal quarter to date, net revenues are exceeding all comparable prior periods of this fiscal year. MF Global remains confident in its business prospects and long-term financial performance.

The company will hold a conference call at 11:00 a.m. EST today to discuss the matter.

A live audio webcast of the presentation will be available on the investor relations section of the MF Global Web site and will be available for replay shortly after the event.
Last edited by stamo on Thu Feb 28, 2008 1:30 pm, edited 1 time in total.

RedRock
Roundtable Knight
Roundtable Knight
Posts: 941
Joined: Fri Jan 30, 2004 3:54 pm
Location: Chicago

Post by RedRock » Thu Feb 28, 2008 11:44 am

Wicked Wheat, in that schmoes case. :shock:

RE the very fine MF Global Mtrade entry system... For the past month apx Ive been unable to place stop limit orders into the cattle pit on CMEs floor. First call to help desk went something like...

Hi, I cant seem to enter ST LM orders into LC.

MF ST LM are not accepted in LC

Sure they are, Ive been doing it for years

MF Oh

Something must have changed in the permissions file to disallow st lm in LC

MF NO NOTHING HAS CHANGED, Now just calm down and lets try to figure out what You're doing wrong.

I'm not doing anything wrong. Using the same process ive always used...

MF Look, do you want my help to figure out what you're screwing up?

Me Hung up
..........................................................................

Second call to help desk following week...

Hi, I cant seem to place st lm into lc....

MF Whats the error message?

it says .... order_type_api bla bla bla

MF ah, sounds like its on our side, Ill look into this and call you back in 5 min...

never called back
...................................................................................

This week, send email to my rep. He sends me this the following day

Due to CME transition from TOPS to Electronic Clerk, STLM are not available at the moment.
--------------------------------------------------------------------
WHAT,,, I'm sorry, but this cannot be that difficult to accommodate.. Cant be. MF Global, I'm sorry to say has serious issues with their customer order entry technology. For a company which has such broad market reach, and potential to be an unconquerable leader in the industry... They sure seem to be looking in the rear-view mirror as far as technology is concerned. They deserved this wheat loss and need to get on the ball or they will not survive as we know them is my prediction. Seems like a lost ship stumbling through the night with no clear intelligent leadership. Perhaps this wheat whack will be a wake up call.. I don't have high hopes.

No inference to brokers clearing through the company... My beef is with their core IT / Help Desk, and asleep at the wheel leadership.

rr

DMFord
Roundtable Fellow
Roundtable Fellow
Posts: 88
Joined: Wed Jun 27, 2007 8:11 am
Location: NB, Canada

Post by DMFord » Thu Feb 28, 2008 1:01 pm

No interference to brokers clearing through the company ???

My broker at MAN said he was being refused GTC stops for SY(Pound/Yen), despite having the stop put in place a few days ago.
Tried Good for the Day & this was rejected too!

Somethings afoot!

RedRock
Roundtable Knight
Roundtable Knight
Posts: 941
Joined: Fri Jan 30, 2004 3:54 pm
Location: Chicago

Post by RedRock » Thu Feb 28, 2008 3:31 pm

DMFord wrote:No interference to brokers clearing through the company ???
I meant to convey that I meant no animosity to IBs clearing through MFG. Although some IBs do offer a choice of clearing houses to some customers. MFGs coverage is difficult to match...

Not sure about SY. But LC is a flagship product and the pit is still very much alive. It should have been seamless to us even if they changed handhelds. (much less a month later) Ill eat humble pie if this is an issue at CME group. I'm presuming this is MFGs interface with CME.

Not to have taken this very important thread off topic.... http://www.mfglobalinvestorrelations.co ... Id=1071036

Post Reply