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NIBA Journal

Insights, analysis, and updates from the National Introducing Brokers Association

CFTC and MF Global Trustee: Firm Assets to Reduce Customer Seg Shortfall
MF Global Updates
2 min read

CFTC and MF Global Trustee: Firm Assets to Reduce Customer Seg Shortfall

The MF Global trustee, James Giddens, estimates a $1.2B shortfall in domestic customer segregated funds, and a further shortfall of $800M of foreign secured funds exists unless and until foreign jurisdictions allow that money to be returned by foreign MF Global affiliates to the US broker. However, the CFTC and Giddens take the position that the US broker’s proprietary firm assets will first go toward reducing any such shortfalls before any amount would be paid to creditors. Assuming the bankruptcy judge accepts this position, a key question would then be just how much firm assets there are. The US broker reportedly maintained about $1B of regulatory capital not long before the bankruptcy proceeding, but Giddens’ attorneys have stated that they currently control just $200M of firm assets. News reports indicate that MF Global worked to sell a large amount of securities in the week before the bankruptcy filing, and it...

By NIBARead article
MF Global Bankruptcy – Request for Release of IB Commission Runs
MF Global Updates
5 min read

MF Global Bankruptcy – Request for Release of IB Commission Runs

On behalf of NIBA Members, this letter was delivered to MF Global courtroom and trustees by NIBA attorneys on Jan. 4, 2012. A transcript of the letter is below. View the Original Document as Submitted to the MF Global Trustee (PDF) Dear Mr. Giddens: I write on behalf of my client, the National Introducing Brokers Association (NIBA). The NIBA is a membership organization which has represented the interests of Introducing Brokers (IBs), Commodity Trading Advisors (CTAs) and other registered futures industry professionals for over 20 years. Many NIBA members cleared customer’s transactions through MF Global (MFG), and earned commissions as a result. The commission amounts earned were tracked on a daily basis by MFG on documents known as ‘commission runs.’ These commission runs have always been routinely provided to IBs on a monthly basis as standard business records. We know that the commission runs already exist, so their production would...

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IIBs: MF Global Reporting for Net Capital
MF Global Updates
1 min read

IIBs: MF Global Reporting for Net Capital

Discussions with the NFA regarding accounting requirements and concessions in light of the MF Global debacle.  Even though these may change, this is what is recommended up to this point. Receivables from MFG are to remain non-current for net capital Broker commissions remain a liability, a reduction of net capital As long as both parties are in agreement, the MFG broker commissions due can be added back in for the net capital computation. Information provided courtesy of Michael Coglianese CPA, P.C. www.cogcapa.com

By NIBARead article
MF Global Trustee Discusses Recovery Process for Offshore Funds
MF Global Updates
2 min read

MF Global Trustee Discusses Recovery Process for Offshore Funds

The MF Global trustee held a meeting today (12/20/11) to provide information about the recovery of MF Global customer funds that were held for trading futures on foreign exchanges. Such funds are treated as being in a separate class than the funds held for trading futures on domestic exchanges under US bankruptcy law, and may or may not have their own shortfall apart from the apparent shortfall in domestic funds. The customers of the US MF Global broker had more than $800M of these offshore funds, and more than $600M of that amount was with the UK MF Global affiliate. Other significant amounts were with Canadian, Singapore and Hong Kong affiliates, all of which are in insolvency proceedings under local jurisdictions. The US MF Global trustee will file a single omnibus claim on behalf of all the customers of the US broker with such offshore funds, so its customers need...

By NIBARead article
CFTC Actions - MFG
MF Global Updates
1 min read

CFTC Actions - MFG

To Members of the NIBA: On Thursday, Dec. 15 I wrote to the office of Commissioner Jill Sommers to ask questions concerning the permitted investments of customer seg funds by FCMs. Yesterday I received a call from her office. The Commission will be reviewing current regulation in the context of lessons learned from MF Global. Ms. Sommers indicated that input from the NIBA will be a valuable part of that process. I will keep you posted on the dates, agenda points, etc., and I invite comments and suggestions. Melinda Schramm, Chairman NIBA

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Final Information Regarding the Third Interim Distribution of Customer Funds to Clients of MF Global Inc
MF Global Updates
1 min read

Final Information Regarding the Third Interim Distribution of Customer Funds to Clients of MF Global Inc

On Friday, December 9, 2011 the U.S. Bankruptcy Court approved a petition by the SIPC Trustee for a bulk transfer and distribution of up to $2.1 billion to former MF Global Inc. commodities customers. The intent of this third distribution is to restore 72% of US segregated customer property to all commodities customers on a pro rata basis. As such, many US segregated customers who have already taken part in one of the first two interim distributions or have yet to receive a distribution may be entitled to receive further funds. The distribution for each account will be calculated based on the Net Liquidating Value on the day prior to transfer. Click here for the full text

By NIBARead article
AML and Ethics Training Certifications
MF Global Updates
1 min read

AML and Ethics Training Certifications

Announcement Re: AML and Ethics Training Certifications NIBA members who formerly cleared MFG and took AML and Ethics Training from the Walsh Agency, can receive a copy of their certification documents free of charge. Receiving FCMs are required to confirm that APs have completed AML and Ethics Training. Those confirmation records are not readily accessible from MFG. If you took your trading from the Walsh Agency, the Agency will send you a copy of the declaration and certification for no charge. Email WalshAMLEthics@gmail.com, an NIBA Member Benefits Provider, and they will send you the documents within 72 hours free.

By NIBARead article
CME Group Letter on Terry Duffy's Senate Agriculture Committee Testimony
MF Global Updates
2 min read

CME Group Letter on Terry Duffy's Senate Agriculture Committee Testimony

To Our CME Group Trading Community, Tuesday December 13th, Terry delivered testimony as part of the Senate Committee on Agriculture, Nutrition and Forestry's hearing on the failure of MF Global. We continue to share with the Congress that MF Global has put market users in a tragic position, as transfers of customer funds made by MF Global for the benefit of that firm are very serious violations of the Commodity Exchange Act, CFTC regulations and CME Group rules. These violations - not inadequate regulation - caused tremendous harm to our customers and our markets. We also continue to advocate for the return of customer funds - as much as possible as soon as possible. We are pleased to report that the MF Global Trustee's third distribution of customer funds (72 percent of total U.S. segregated customer property) is in process. After receiving funds from the Trustee early this week, we...

By NIBARead article
NIBA MF Global Updates and Activities
MF Global Updates
2 min read

NIBA MF Global Updates and Activities

Dear NIBA Members - Welcome to the MF Global Update on the NIBA website. The purpose of the Update is to provide accurate, current information about all aspects of the MF Global failure and bankruptcy which directly affect our members. Here are a few actions the NIBA has already taken in your behalf: Filed our “Release the Seg Funds” Petition in the bankruptcy court. The Petition included approximately 700 signatures collected online in about 48 hours. Our Petition continues to be one of the items by which the court was most impressed. Engaged representation to file our Petition in person and to attend every substantial court hearing and bankruptcy trustee meeting in New York City. Met, and continue to meet, with NFA regarding its responses and filing requirements as a result of MFG’s failure. Ongoing communications and responses. Met, and continue to meet, with CME Group regarding transfers of customers...

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