Between the wine and punching bag, I doubt I am the only one doing some broker shopping as this unwinds. I am curious on where you are thinking about transferring your account to if and when we get some cash back. What actions are you going to take in order to minimize this segregated risk that use to be so secure. I am not finding much else other than using T-Bills for collateral, but even that doesn't seem to be 100% safe. I am not comfortable parking over 5m at any one broker anymore due to this new seg account loophole exposed. Options?
The central issue with MF Global is how customer segregated funds were handled and what they were invested in. A focus on who jumped ship in the end days looks like a make work project for lawyers. Customers have a right to transfer business. As much as it's nice to think that claw backs could reduce the short fall I don't agree with the idea of trying to claim funds of customers who legally transferred out. The failure here is basically a micro-structure issue for the industry. CFTC tried to amend the rules on investment of customer segregated funds. The biggest push back probably came from FCM's. If you look at the chronology of the comment file, MF Global's interactions with CFTC on the proposed rules only came last summer. By then they were already placing their bets. I suspect their interactions were as much a fishing expedition to see if CFTC was going to make the amendments or not. Perhaps the head of CFTC did one last favor for his old buddy JC? Good thing he's recused himself. Maybe there are questions he doesn't want to answer. I don't know why CFTC was so slow to move on this issue. The only thing thats clear is that they were on a mission to clean up the swaps side of the business. Perhaps they were per-occupied with that area of regulation. CFTC's survey from 2007 showed that the investment of customer segregated funds in foreign sovereign debt was not very common. It would be interesting to know how common that is today.... MF Global blew up. Jeffries appears to have dodged a bullet. I wonder where IB invests segregated customer funds?
They have said on earnings conference call they have a credit committee that decides what money centre bank to put it in.
When can funds be expected out of the bankruptcy - and how much? Some people are still waiting for funds from the Lehman bankruptcy. Isn't it better to grab 90% offered by some buyers of these claims, like Prime Shares, Contrarian Capital, UBS Investment Bank, Tannor Capital and others now and put the funds back to work? A claimant might never get 100% - perhaps 95%! Felix