James Giddens, the court-appointed trustee for failed broker-dealer MF Global Holdings, Ltd, is looking into options to disburse funds to at least some of the customers affected by the freeze on company accounts. About 30,000 accounts are still frozen , though exchanges and regulators managed to free $1.55 billion connected to standing trades. “We understand the frustration of some customers,” said a spokesmen for Giddens. “We are working around the clock and exploring options for getting additional assets back to customers without jeopardizing the ability to fairly and equitably distribute the assets of the estate to all customers.”
However, those with cash still locked up in the company will most likely have to go through a claims process and share recovered funds with others. Though no specific number has been put on the cash frozen inside MF Global, it will not cover all the company’s obligations. “Distribution of the assets will be pro rata, if there’s insufficient there to fulfill all obligations,” explained the president of the Securities Investor Protection Corp (“SPIC”).
The CME Group has already transferred 15,000 futures accounts from MF Global to other clearinghouse member firms. This move brought $1.45 billion in trading collateral (60% of MF Global’s total holdings at CME) with it. IntercontinentalExchange has transferred another 2,000 accounts with $100,000 in margin. These funds should be unfrozen by the close of business on Tuesday.
Many customers are frustrated by the process, and bemoan the uneven trickle of information reaching them. “If I would have gone the other way and put on positions instead of liquidating, I would be treated preferentially for acting in a way that was adding risk,” one customer said. “I got out because I thought it was the prudent thing to do given the circumstances.”