Traders' Roundtable

Anyone feeling as uncomfortable as I am? Segregated funds, perfomance bonds with the exchanges, FDIC insurance up to $100,000......................................but.

AFJ Garner wrote:Anyone feeling as uncomfortable as I am? Segregated funds, perfomance bonds with the exchanges, FDIC insurance up to $100,000......................................but.

I am sure there are lots of people who feel the same way as you do.

1 year ago, I had a due diligence session with REFCO and Man Financial. Although the people at REFCO were really nice, I didn't like some of their business practices, especially when it came to account segregation and trade execution.

The guys at Man in Chicago were really up front with me, and they even said things that surprised me. One of the head guys at the futures desk told me not to believe anything that anyone says, including himself .. and that I had to really dig deep to get the real answers for myself.

I did a ton of investigating, and I was pretty sure that Man did things in ways that were more aligned with the way I wanted to run my fund. I am really glad I did a lot of work up front to save me headaches like this going forward.

I hope the REFCO clients get their issues resolved soon~

Edward

Anthony,

Indeed an incredible and very sad story.

I hope CME's press release can give you some comfort if you hold a Refco futures account.

http://www.cme.com/about/press/cn/05-13 ... 16261.html

Cheers,

Old European

edward kim wrote: I had a due diligence session with REFCO.... .....I didn't like some of their business practices, especially when it came to account segregation

That is a pretty bold statement.

I'm feeling very nervous also. I'm starting to look into switching brokers. Of course, if they are really in trouble, it may be too late already.

I have just given instruction to transfer out my T Bills. I have decided to leave cash and open positions there until the waters settle. T Bills form 2/3 of my a/c so at least if I DO get delivery of those, it is not a complete disaster. I have of course phoned Refco but as per their press statement they say "client funds ARE segregated, everything is safe". Who knows but I would rather play safe. Hope its not too late.

I'll bet there are many ahead of me in switching from Refco. I'd appreciate pointers. I haven't looked for a new broker in many years. I looked into IB but they only handle electronically traded markets.

I trade some electronic markets but also some that are pit only. I'm looking for online order entry and account management. I give higher priority to good execution than to low commission.

If I were you matey I'd give high priority to security of your funds. Take a look at the attached spreadsheet I downloaded from CFTC.gov. I'm going to take a good look at who are the best capitalised and least likely to go under for fraud....as if anyone can really tell. Think I'll call UBS!

A trading buddy of mine opened a futures account at UBS. After all the paperwork was completed including the USA Patriot Act folderol, UBS sent him an "Indemnification Agreement" to sign which said that if anything goes wrong, including if UBS makes an error and he has it on tape, nevertheless he agrees not to hold them liable. He closed the account instantly and found another firm (Cargill). Let the potential client beware.

I have a securities account of long standing at UBS - think I'd better double check the paperwork...............but lets face it Sluggo, if the **** hits the fan its a no win scenario for any client in any bank or company. The list of scandals and bankruptcies throughout history is endless and more recently lets list Lloyds of London, Barings, Enron, Swiss Air and on and on. The best can and do fall along with the worst. The unthinkable does happen - every year.

And don't lets forget that even if cash is covered by FDIC, even if the exchanges hold the clients' good for the FCM going bust (if it does) , even if clients' funds ARE segregated, if the shutters come down how long is it going to take before you get some or all of your money back?

Regardless of paperwork and contractual relations, I believe one is well advised to split one's investments up as much as possible amongst different institutions and investments. To this end, I use at least half a dozen different custodians, use money market funds or government securities rather than single bank debt, etc etc

As if this business does not carry enough risks already.

AFJ Garner wrote:I have just given instruction to transfer out my T Bills. I have decided to leave cash and open positions there until the waters settle. T Bills form 2/3 of my a/c so at least if I DO get delivery of those, it is not a complete disaster. I have of course phoned Refco but as per their press statement they say "client funds ARE segregated, everything is safe". Who knows but I would rather play safe. Hope its not too late.

I just heard that REFCO customers currently on liquidation only .. is that for all accounts, or is that for only one of REFCO's subsidiaries? I only heard about the one offshore arm, and that's it ...

No, it isn't that dark. Yet.

Refco LLC the futures division is supposedly relatively unaffected by the fraud and is executing business and accepting/returning client funds normally - or at least so I was told. The entity/entities closed down are the securities and prime broking arm(s). Trouble is, you never know. These ghastly events have a habit of .....................getting worse and worse.

Not a big surprise:

http://today.reuters.com/stocks/QuoteCo ... -2005+RTRS

Cheers,

Old European

I closed my Refco LLC account Friday morning, and it took until Monday afternoon for them to wire my funds. I spoke with client services Monday morning, and they told me that they were deluged with withdrawal requests and were backlogged. I wonder if there will be any Refco customers left after this debacle.

Does anyone have any broker recommendations for a former Refco customer? I'm looking for phone support, reasonable rates, T-bills, and the ability to trade global markets.

I'm in the process of switching to Man Financial. There were some positive comments in the forum. I didn't do much due diligence as I was in a hurry to start moving. I can always switch again later with more time to consider the issues. I FAXed cash wiring instructions to Refco on Monday morning and this morning they told me the transfer should happen today - Tuesday.

The person on the phone who told me how to request a funds transfer told me my account was safe due to segregation of funds. To me, segregation of funds is like musical chairs. The longer you play the fewer the chairs.

if you are a CPO or CTA and are interested in Man Financial, try calling Matt Dougherty or Scott Kebby .. they are at the trading desk in Chicago, but they might be doing CPOs and CTAs only ... if you are strictly retail, you might have to go through the main line.

Edward

If you are a high volume trader, ManProFutures provides TT and PATS solutions that have been extremely reliable along with good support. You can set up your account to trade non-electronic markets through one of their other platforms also like M-trade.

http://www.manprofutures.com/

...well, since we're on the topic of switching brokers I have a question for the forum. I am about ready to begin trading a LTTF system. I would like to trade the markets via an electronic front-end. My orders would be entered in the evening or early morning as stops which, if hit, would bring me into a position. However I have not been able to figure out how I would enter my (initial) stop orders for these open positions. (I do not intend to watch the market during the day). I am not comfortable sitting overnight without a stop on an open position . Does anyone have an idea how this could be done? My only thought is to ask the broker to watch for any executions and then manually place my stop order. Am I missing something?

From -
http://www.theglobeandmail.com/servlet/ ... s/Canadian

"The U.S. Securities and Exchange Commission has also begun an informal inquiry into allegations that the U.S. brokerage arm of Man Group PLC, one of the world's largest hedge fund companies, helped PAAM hide $175-million in losses. Man Group's subsidiary, Man Financial Inc., has denied any wrongdoing and said it will co-operate fully with the SEC. "

christian wrote:From -
http://www.theglobeandmail.com/servlet/ ... s/Canadian

you need to register to see this article ... click on this link instead to avoid registration:

http://66.102.7.104/search?q=cache:K7Nb ... PAAM&hl=en

here is the key part of the document:

GlobeandMail.com wrote:Mr. Hodgson alleged that another key player in the scandal is Thomas Gilmartin, a senior vice-president at Man Financial. Mr. Hodgson alleged that Mr. Gilmartin, who worked in New York, handled trades for Mr. Eustace and was a part owner of PAAM"

big-time conflict of interest - so much for due diligence! i'm keeping an eye on Man group's stock .. at least the chart doesn't look like REFCO's - yet!

http://finance.yahoo.com/q/bc?s=EMG.L&t ... z=m&q=b&c=