MFGlobal | Futures Trading | Index and Forex Mechanical Trading

MFGA-CSG Submission to Treasury

MF Global Australia Clients Support Group
As individual clients of MFGA we are of little relevance to Deloitte, ASIC and the Australian Federal Government.

Grouped together as an association we can become the elephant in the room that no one will be able to ignore. Not Chris Campbell from Deloitte. Not Bill Shorten the Minister for Financial Services and Superannuation. Not Greg Medcraft the chairman of ASIC.

Join our association of MFGA clients - MF Global Australia Clients Support Group at; www.mfgaclients.com.au

and then visit us on Facebook at; http://www.facebook.com/groups/mfgacsg/

Let's stop being irrelevant and start being counted. Let's act now to ensure our voice is being heard. Visit the associations web site and join up now!

My Personal Circumstances
The collapse of MF Global has sent a shock wave through the futures trading community that has been felt around the world. Unfortunately I have also been caught up in it as MF Global held three of my trading accounts: SpiTrader, IndexTRADER and IndexALERT.

As of the 31st October 2011 MF Global held AUD166,000 of my funds spread between my three accounts which I'm unable to access. At the time I did not hold any open positions so I was in 100% cash.

Lucky for me I had another futures account so I was able to continue to trade. However many were not so lucky.

Please Don't Accept the "Complexity" Line Being Promoted By Deloitte
In my opinion "complexity" has become a key excuse for not facilitating a quick interim distribution of client property back to clients.

Let's be straight here and understand the Key Facts and Key Point.

Key Facts
- Pools are defined by Product (Futures, CFDs, Online FX)
- Execution risk is a personal risk.
- Pool risk is a group risk.

Key Point
These Key Facts are clearly defined and agreed to by every futures and OTC trader as outline in Client Agreements.

These are industry conventions and practise.

Deloitte should be following industry convention and the agreements signed by all MFGA clients.

Accordingly they should use the close out price as the final settlement price. Remember execution risk is a personal risk.

Deloitte should be applying on a pro-rata basis any shortfall in settlement collection across all accounts in the relevant pools. Remember pool risk is a group risk. And although that works against my own interests, as I was in 100% cash without any open positions, I know sharing the loss across the pool is the correct thing to do.

All MFGA clients know this. We have all signed risk disclosure statements and client agreement forms.

There is nothing complex about it.

Yet it is a major theme behind their excuses for not facilitating a partial distribution to clients.

To suggest the administration is "complex" is purely opportunism by Deloitte in an attempt to prolong the administration and generate more fees.

We have to remember that Deloitte, at the end of the day, is essentially providing an independent back office settlement function. Independently collecting funds and reconciling both their (MFGA) bank accounts and customer trading statements. They should be doing it according to industry practice. To suggest it’s a complex task is misleading. If it was so complex then asked yourself why most settlement functions are operated by young 20 somethings who will usually report to a 30 something supervisor who in turn usually reports to a 40 something manager?

In my opinion Deloitte are purely being opportunistic to leverage and exploit their position as Administrator at the expense of clients receiving a partial distribution of their client property. I'm sure Deloitte will strenuously deny my accusation however right or wrong, it's what I believe.

Monies Recovered
Estimated Fund Recovery 14th Dec 2011;

Pool                      Funds           Collected %
CFD                      $84m            81%
Futures                  $208m          71%
Online FX               $16m            81%
Online FX               $5m             80%

Total                      $313m          74%

MFG Locations That Have Agreed To An Early Partial Distribution:
   The US
   Canada
   The UK
   Singapore
   Hong Kong

My MF Global Australia Updates

Friday 27th January 2012
Lets Push for Individual Segregated Accounts

Tuesday 24th January 2012
Communication Is Key

Monday 19th December 2011
United We Stand, Divided We Fall

Wednesday 7th December 2011
A Great Article To Read

Sunday 4th December 2011
The COC Meeting - A Brief Update

Monday 28th November 2011
Deloitte Dragging Their Feet

Tuesday 15th November 2011
Why It's So Tricky

[If you are NOT already on my MFGA list and you would like to receive my MFGA updates then please send me an email to bpenfold@tpg.com.au requesting to join my MFGA list.]

Summary: Background, Impacts & Solution of MF Global's Demise
This is an excellent overview and insight into what happened to MF Global with impacts and solutions.

List of Questions for Deloitte