Is any MF Global customer currently in contact with the trustee? I am getting replies from SIPC and even got a reply for MF Customer Support but no reply yet from trustee
If anyone here is looking for a new brokerage firm in Canada, I would recommend Friedberg Mercantile in Toronto. I've dealt with them for years and they are great. They are also going to be launching a new online platform soon. -TorontoFutures
Based on that reply.. there is a good chance that initial deposits into a futures account might be protected by SIPC. Lets say you deposited 100K cash into your account.. and made 50K profit trading crude oil. The 100K might be covered by SIPC, the 50K profit might not be (unless the profit was swept in as cash from another account like IB claim to do). If your account is in the hole since you opened it (showing a loss) then you might be entitled to full protection for what is left
I am quite shocked at this email reply you received. Either the individual handling your case is clueless or my understanding of how SIPC works is completely f***ed up. They consider how your cash was generated? Cash is cash. You've liquidated a futures position into cash. How it was generated should be irrelevant I would have thought. I'm stunned... Does this also mean that we should periodically empty our futures accounts to "reset" the level of compensation to the level of the (new) initial deposit?
I am not sure where the confusion is with all this. There are legally two separate and distinct trading accounts between securities and futures. Even though IB or others may sweep money back and forth behind the scenes the fact remains that you have two separate accounts. Cash and securities in your securities accounts are covered by the SIPC up to their limits. Anything, cash or otherwise, in your futures account is not covered by SIPC or any other insurance. http://www.nfa.futures.org/nfa-faqs...orex/how-is-my-futures-account-protected.HTML âeven though an FCM is required to segregate customer funds, customers still may not be able to recover the full amount of any funds in their account if the firm becomes insolvent and there are insufficient funds available to cover the obligations to all of its customers. Customer accounts are not insured.â Futures accounts are not insured. That is all you need to know.
Whether or not futures funds are insured, I suspect we will get our money eventually. Right now, per news reports and court filings, the shortfall is about 12%. Personally, I would be happy to just get my 88% and move on. But I suspect that some of the bigger accounts would start a class action against the CME and the CME would be forced to settle. As a regulator, knowing for at least a month that there were liquidity problems at MF, they cannot allow customer funds to slip away. And they and the CFTC will just add a couple pennies transactions costs to make it up.
So if you managed to flatten your futures position into 100% cash you are not protected, even though you hold no futures positions. That seems clear based in the other posts but I'm surprised and shocked. But what about any open futures positions you might have held at the time of bankruptcy. Do you still have "ownership" of these positions even though the account is frozen? Or, are they null and void? Presumably the former because of the other side of transaction. So is MFG still actively managing open futures positions on your behalf, posting daily MTM margin etc based on price fluctuations? They will close your positions in the event of significant price move against you so you cannot lose more than the funds in your account, right? Losing your whole account is one thing, being liable for losses beyond that is another. Or are they plain and simply closing all futures positions within a given timeframe, say by the end of this week? If you've got open positions in a frozen account should you be hedging those positions in another broker account right now to effectively flatten the risk? Should you hedge half to err on the safe side? It's not clear to me what you should be doing to reduce your risk in the event that you are holding open futures positions with MF Global. There is some luck though - imagine if it was late November/early December and you facing physical delivery of December contracts in a weeks time...
Cash in a futures account is for the purchase of a non-security, and as such clearly not covered by SIPC. That's a no-brainer. I read today frozen accounts will, hopefully, be transferred to some other random FCM within the next 48 hrs. Only 60% of account net liq value will be transferred, remaining 40% stays behind to cover potential loses at MF. This is all pending trustee approval of course, but that's the CME proposal.