Friday, September 30, 2022

MF Global Cuts Ties to Grains

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CHICAGO (Reuters) — MF Global Holdings Ltd. on Tuesday cut some of its last ties to the grain markets that it once dominated, shedding memberships at the Kansas City exchange and possibly at the Minneapolis exchange.

The bankrupt brokerage unloaded the last of its memberships at the Kansas City Board of Trade, selling two for $480,000 each and one for $500,000, according to the KCBT.

The sales came after MF Global sold three KCBT memberships last week for around the same price, which has been roughly the going rate for memberships this fall.

The Minneapolis Grain Exchange, which trades hard red spring wheat futures, confirmed a membership at the exchange was sold for $106,000 on Tuesday, but said it would take a few days for the identity of the seller to be known.

“MF Global no longer has any Class A memberships,” confirmed Shelia Summers, vice president of marketing at the KCBT, which trades hard red winter wheat futures.

MF Global’s assets are being liquidated by Trustee James Giddens after the broker filed for bankruptcy on Oct. 31. The company run by former New Jersey governor Jon Corzine collapsed after making bad bets on European sovereign debt.

The bankruptcy has had a significant impact on the grain markets, with many of its clients still missing some of the money they held in the company’s accounts.

MF Global ranked third in volume of executed or cleared transactions at the Chicago Board of Trade.

Prior to its collapse, MF Global owned 3 percent of the memberships at the KCBT, which is the country’s second largest wheat exchange after the CBOT.

MF GLOBAL LIQUIDATING ASSETS

Some farmers who had MF Global accounts have been sidelined from hedging because millions in customers’ dollars are missing. The disappearance of that money has undermined their confidence in the markets and prevented some from establishing new positions.

“There are still positions and equity that are locked up,” said Matt McGee, market analyst for Country Hedging in Kansas City. “That certainly has reduced both local speculators’ and the bona fide hedgers’ capability to manage their risk and move in and out of positions.”


“They’re trying to liquidate all assets,” McGee said, of the sale of memberships.

The buyer of two of MF Global’s memberships was Jump Trading, a Chicago-based trading firm, according to the KCBT. It bought one membership for $500,000 on Tuesday and the other for $499,000 a week earlier.

Jump Trading did not respond to requests for comment.

Another buyer, who declined to be named, said he bought one of MF Global’s memberships because the firm agreed to sell for the right price. He said he didn’t feel any special tie to the historic collapse because of the deal.

“There’s no sentiment in this industry,” the buyer said.

A CME spokesman did not immediately respond to requests for comment about membership sales at the CME and CBOT.

The sales of MF Global’s assets may be used to pay back the former MF Global clients who have been clamoring for their money since the broker collapsed.

Giddens, the trustee liquidating MF Global’s broker-dealer unit, asked a federal bankruptcy judge on Tuesday to authorize the distribution of as much as $2.1 billion to former commodities customers, roughly doubling the total payout to $4.1 billion.

Giddens said the increased payout should restore at least two-thirds of U.S.-based property to former customers of that unit. He estimated the latest transfer, which requires approval from a U.S bankruptcy judge, could take up to four weeks and would require help from CME Group Inc. and other derivative clearing organizations.

Source:  Reuters

Posted by Haylie Shipp

 

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