Since the Oct. 31 bankruptcy of brokerage MF Global, about 72 percent of frozen customer funds have been returned, according to a recent update.

MF Global kept an estimated $5.9 billion in U.S. customer segregated funds, according to James Giddens, the trustee overseeing MF Global’s bankruptcy. Giddens secured about $5.3 billion for transfer. Of that amount, he has paid out $3.83 billion to customers via three bulk transfers that took place in November and December, he said in a January presentation.

Here’s a breakdown of the transfers:

FIRST BULK TRANSFER: 10,202 accounts totaling $1.52 billion

The first transfer of funds began on Nov. 3, a day after a U.S. bankruptcy judge approved Giddens’ request to transfer accounts to futures merchants.

The funds transferred included accounts containing open U.S. commodity contracts and a percentage of the associated collateral used for margining as of Oct. 31.

Initially, the CME Group, the exchange which cleared most of MF Global’s trading business, expected that client accounts would be transferred to one of six futures commission merchants (FCMs).

These included: ABN Amro Chicago Clearing, ADM Investor Services, Dorman Trading, INTL FCStone, R.J. O’Brien, and/or Rosenthal Collins Group.

Eventually, that group was broadened to include an additional five merchants: Macquarie Futures USA, Vision Financial Markets, Newedge USA, BNP Paribas and Penson Futures.

SECOND BULK TRANSFER: 15,148 accounts totaling $477 million

The second bulk transfer occurred in late November. The transfers involved accounts containing only cash or cash equivalents on the day MF Global filed for bankruptcy.

The same 11 futures merchants that participated in the first bulk transfer participated in the second transfer.

In addition, PFGBEST participated in this transfer and received its first accounts on Nov. 23.

THIRD BULK TRANSFER: 27,905 accounts totaling $1.83 billion

The third bulk transfer occurred in December, after it was approved by the bankruptcy court on Dec. 9.

The transfer included MF Global’s former retail commodities customers with U.S. futures positions, Giddens said in a press release at the time.

ESTIMATED SEGREGATED FUND SHORTFALL: $1.2 BILLION

Throughout the bulk transfer process, Giddens has maintained that there is an “apparent significant shortfall” in MF Global’s customer segregated funds.

Some of this money could be sitting in foreign depositories as well as in the United States.

Reporting by Cezary Podkul

Follow Reuters Legal on Twitter: @ReutersLegal
Visit Thomson Reuters News & Insight for more.

This entry was posted on Monday, February 6th, 2012 at 12:18 pm and is filed under Commodities, MF Global. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.