A fellow ET Poster (obviously an inexperienced one) was seeking advice and this fool told him this: "US segregated accounts are secure and are made whole almost immediately by the Clearing Corp. and the clearing members. All others I would say on a case-by-case basis." Taking things out of context is a fools game. You may be the only person on earth that is a bigger fool than he is.
MF customer problems are due to fraud, not something seriously wrong with the system. I guess there's probably a monitoring problem but other brokers should be taking note that if they play with customer's money, they can vanish in a millisecond. That Corzine guy should be right now in jail, a huge loss of confidence he has caused to the futures industry and the US financial system.
I disagree - it is completely unclear how open trades have been handled by the CME, Nymex, Eurex, etc - anyone have any real details? I know the perfectly timed blowout of Mother F****** Global has prevented the process for some very substantial physical gold deliveries due in December. Makes you want to go hmmmm?
Another MF Global bad precedent: customers were blocked out of their accounts. The system is supposed to be able to allow orderly settlement/closure of positions and fund transfers, but everything was badly mismanaged by Corzine's crook team. Something to think about: MF Global management was so bad, the firm's dead corpse cannot even be sold (except for a few pieces) the thing is being liquidated, in other words, it's disappearing for good. Even REFCO had several potential buyers.
Fraud may likely be the case in every blow up... What good is 5 years of litigation and the eventual uncollectable judgment going to do for anyone except the lawyers and trustees? If this doesn't scare the crap of you and shake your confidence than by all means continue on playing FCM roulette... good luck. Maybe the regulations should require FCM's to post and carry fidelity bonds at all times insuring 100% of the cash, securities and assets that are on deposit and under their control. As it stands now appears CFTC have granted them all a license to steal.
Of course my confidence has been shaken. I repeat. The CFTC should've made an example of that Corzine crook. Otherwise as you point out brokers have been granted a free option which amount to a license to steal customer's money.
buzzy .... I agree that if Corzine is at all responsible for using segregated funds he should do time. But there are even more important flaws here. To have a system that is as vulnerable to fraud as this one is just doesn't make sense. The CME is King Kong in this business and they need a mechanism to step up and guarantee at least liquidating trades within hours. It is simply to unstable to let traders sit in limbo without ways out. Bad enough capital may be at risk but open positions without an out destabilize the entire system. Imagine being short CL options when MF busted as your margin requirement rocketed up? The June'11 calls went from .11 to .31 in just days and, given the vol. calculation that SPAN margin factors in, disaster is easy to imagine. It is a systemic problem because fraud is systemic.