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MF Global On A Massive Scale?

  1. Clearly segregation of client funds has been shown to present significant risk in futures. Yet there is another level of risk that is not commonly understood. US segregation rules apply only when you are trading on US Exchanges. Once you use exchanges located in other jurisdictions you fall under a different set -- or even many different sets -- of rules even when using a US broker. And of course FX is even more of a problem.

    It is 10PM do you know what rules apply to you, your $$ and your open positions? My bet is 1% of those who execute on foreign exchanges do know. Do not be one of the 99%.
     
  2. Like to learn more about this subject... Thanks.
     
  3. I only trade on domestic US exchanges but I wish you well in your research.

     
  4. Very important... please post more info
     
  5. Swan Noir, I'll keep repeating until it happens that it's client funds insurance
    that's required, regardless of regulations, meanwhile

    what do you mean ? "And of course FX is even more of a problem." -
    I must be one of the 99%
     
  6. Insurance is clearly the way to go ... I don't disagree. I like the SIPC model and it would be fairly easy to implement.

    The reason FX "is even more of a problem" is historically FX brokers were not required to segregate so you had (have?) straight up counter party risk and no preference in a bankruptcy.

    Since I do not trade FX it is possible my information is dated.

     
  7. apex ... the details depend on each specific exchange. You need to research those exchanges you trade on.

     
  8. I stopped trading FDAX several weeks ago - no clear answers from my clearing firms. CME group and Mother Fuc**** Global high tech theft is bad enough.
     
  9. you could eliminate some of the counterparty risk by just trading fx futures through cme AND using ib. the mf incidient is very disturbing b/c i always thought cme was on top of things.
     

  10. US segregration rules didnt add up to dogshit did they?

    Segregration rules are even more strict in some counties than in the US and in some other countries they are worse.
     

  11. Its still the case, you are an unsecured creditor in the case of a FX firm bankruptcy (except if you deal with a bank).

    UK is way safer from that perspective (and its the center of the world as far as fx is concerned anyways).
     
  12. Why wouldn't you be an unsecured creditor of the bank? Are FX accounts at the bank a deposit account and FDIC insured?

     
  13. I think they are, in addition to the implicit govt backstop of the bigger banks. Not sure what happens to a margin position in the worst case tho and if ECP / professional clients are protected.

    In the UK there is a futures-like segregation requirement with trust accounts - sounds rather safe (assuming no fraud).
     
  14. UK futures & FX customers fared badly in the Lehman collapse. US customers lost zero but UK clients -- mostly hedge funds -- bit the bullet for a billion plus.

     
  15. I don't know how it is, that after opening a trading account with a broker and then
    funding it, it appears that MY money suddenly belongs to the broker
    wtf came up with that idea

    there's something insidiously sick and diseased with a system that can't separate
    MY money from the funds - and debts belonging to the business

    I admit to not reading the 'Customer Agreement' - I can't change it so why bother
    but why aren't fx client funds segragated ? not - as we know it makes any difference

    I'll have to read Oanda Canada's CA to see what it has to say about segregation
    but as you know client funds at any/all Canadian brokers - no differention are insured
    up to C$1,000,000 , so segragation doesn't come into the equation, likewise where
    the trade takes place has no bearing on client funds being insured

    I have to think that the U S of A is a corrupt country
    don't think it started out as corrupt, but the way in which LAW has been used to
    change the way things are done has corrupted systems
    why the U S of A has placed LAW above all else is something for a political scientist
    or historian to answer, but it's definitely a corrupt system that allows a company's
    creditors to 'steal' the company's client funds to pay themselves
    it's completely unsensible to me that such a thing can happen, and nothing whatsoever
    to do with the LAW nor accounting, nor bankruptcy acts

    some Americans know about the corrupt entity the U S of A has become, the OWS
    is one reaction to it, homeowners occupying/fighting foreclosure another

    insurance of course flies above the corruption but it shouldn't be left to brokers to
    decide whether or not their clients should be permitted to have their funds insured
    particularly when it isn't the clients that are stealing their own money

    as to the SIPC
    " . . . investment fraud in the U.S. ranges from $10-$40 billion a year.
    Congress specifically considered creating a Federal Broker-Dealer Insurance
    Corporation, but *law*makers* wisely concluded that such a designation
    would be both misleading and out of step in the risk-based investment
    marketplace that is so different from the world of banking." - emphasis added
    http://www.sipc.org/who/notfdic.cfm