Eurozone tremors start: $41 billion dollar financial broker MF Global files for bankruptcy

Posted on October 31, 2011 by The Extinction Protocol

MF Global, the financial derivatives brokerage run by former Goldman Sachs chief Jon Corzine, filed for bankruptcy protection, becoming one of the highest-profile U.S. victims which bet heavily on European government debt. With the Chapter 11 filing, MF Global will likely to be added to the ignominious list of the 10 largest bankruptcies to occur in U.S. corporate history.

October 31, 2011 – NEW YORK – Besieged broker MF Global filed bankruptcy today after a frantic effort over the weekend by CEO John Corzine to strike an out-of-bankruptcy sale came up short. MF Global had a tentative deal to sell assets to Interactive Brokers Group as of late Sunday, but the agreement fell apart as talks continued overnight, people familiar with the matter said. Discussions ended around 5 a.m. Eastern Time, one of these people said. MF Global had been considering filing just its holding company for bankruptcy protection and then executing the sale. That plan is now off the table, one of the people said. This person said MF Global’s parent company would be included in the bankruptcy filing. Voluntary bankruptcy petitions for MF Global Holdings Ltd. and MF Global Finance USA Inc. hit the docket in a US bankruptcy court in Manhattan mid-morning Monday. The New York Federal Reserve said that it suspended new business with the futures trading company until it establishes that it is “fully capable” of performing its duties as a primary broker. It is one of 22 primary brokers at the New York Fed. Additionally, the InterContinental Exchange limited MF Global customers to unwinding positions and said it will no longer recognize the company or its divisions as a guarantor. MF Global is a major player in the futures markets, so the news had an outsized effect on futures trading. In its bankruptcy filing with the Federal Bankruptcy Court in Manhattan, it listed JPMorgan Chase and Deutsche Bank as its biggest creditors. The company reported a quarterly loss of $192 million last week and has seen its shares plunge more than 60 percent since then. The bankruptcy ended one of the most harrowing weekends on Wall Street since Lehman. –NY Post

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14 Responses to Eurozone tremors start: $41 billion dollar financial broker MF Global files for bankruptcy

Craig S says:

October 31, 2011 at 11:41 pm

Greece to gold referendum on bail out. Volatility or fear index up 22% biggest jump since aug. http://m.guardian.co.uk/world/2011/oct/31/greece-euro-bailout-fresh-crisis?cat=world&type=article

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Dawn says:

October 31, 2011 at 11:54 pm

Is this the first domino to fall in the derivatives market mentioned in an earlier post?

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- The Extinction Protocol says:
  
  October 31, 2011 at 11:57 pm
  
  The first major player in what is estimated to be a $600 trillion dollar market.
  
  $600 trillion derivative time-bomb: the day the glass ceiling finally cracks
  
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  - Dawn says:
    
    November 1, 2011 at 10:53 am
    
    What amazes me is this hasn’t been reported on any major news. With all the worry over the EuroZone, it’s incredible that this would be overlooked in favor of a new resurgence in Bernie Madoff articles…
    
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  - The Extinction Protocol says:
    
    November 1, 2011 at 5:37 pm
    
    Panem et circenses – when people hunger for bread, there is always someone there to suggest cake instead. We’ll rise and fall by the vision we place in front of us…
    
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RainMan says:

November 1, 2011 at 12:38 am

The World Casino.
Tried to work out how derivatives actually work, can’t understand the jargon fully but my understanding so far in it’s simplistic form… it’s just a bet on whether something will go good, or bad, with your money.
It went bad, time to go home.

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- nickk0 says:
  
  November 1, 2011 at 11:43 am
  
  “Tried to work out how derivatives actually work, can’t understand the jargon fully but my understanding so far in it’s simplistic form… it’s just a bet on whether something will go good, or bad, with your money.”
  
  This is probably the most simple – and best – definition of ‘Derivatives’ that I have read, Thank you.
  Key Words: “….with your money”. [ Read: OUR money, the money of investors from all walks of life.]
  
  – Nick
  
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carl says:

November 1, 2011 at 6:16 am

is this the straw that breaks the camels back? no? next one then? truth is I’m bored of waiting lets just get the whole thing over with !

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Irene Carmichael says:

November 1, 2011 at 6:27 am

I was watching the markets today. It did not end well. Oh well, I’m already broke, I might as well be broker. My treasure is in Heaven. I have been preparing what I can. The Lord will provide what I cannot.

Maranatha

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luisport says:

November 1, 2011 at 10:27 am

The news that Greece is planning on holding a referendum on austerity and aid is destroying European markets.

Germany is off 3.9%.

Spain is off 3.7%.

France is off 3.7%.

Italy is off 4.6%.

European banks have given back all post-summit gains, with SocGen down 12%.

Earlier we mentioned how, predictably, Italian yields were blowing out once again.

So seriously, what does Europe do now?

Read more: http://www.businessinsider.com/europe-is-getting-destroyed-after-this-greek-referendum-news-2011-11#ixzz1cRql2cm1

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Brian says:

November 1, 2011 at 10:32 am

Hey Alvin we are still waiting for ” Hail Stones from Heaven ” to end this misery on Earth…!!
Billions Starve, while others declare Billions in bankrupcy, while other’s print Billions in illegal
Dolar currency while still others make Billions out of waging wars and it just carries on and on ?

Sic !

Everyday I pray quietly for Gods Speedy intervention to end this abomination on Earth…

Reading your news everyday ~ keep up the excellent work !

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- The Extinction Protocol says:
  
  November 1, 2011 at 5:46 pm
  
  Thanks Brian. God is ever so patient in His mercy and grace hoping that the signs will awaken some to repentance unto salvation. His character is long-suffering for a world lost and groping in darkness and rotting from its own corruption. 2 Peter 3:9.
  
  I thank you for the continual support
  
  Alvin
  
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luisport says:

November 1, 2011 at 10:52 am

There was a lot of confusion this morning about what kind of impact the bankruptcy of futures dealer MF Global would have on trading operations.

One place the impact was felt big: The floor of the Chicago Mercantile Exchange.

We caught up by phone with Eric “The Wolfman” Wilkinson, the independent floor trader who many know because he stands near Rick Santelli on CNBC.

He explained to us what happened.

The gist: MF Global is the clearing firm for a huge chunk of the traders on the floor of the exchange. That means, essentially, that they guarantee that all trades get paid out, a role that the Chicago Board of Trade used to play directly, but which was outsourced to third parties as part of the CBOT’s move towards being publicly held. Importantly, MF is/was the clearing firm for many sub-firms, which means that many traders ultimately were having their trades cleared through MF Global, even if they didn’t know it.

ANYONE who somehow has their trades cleared through them was unable to trade today, and that means that any trader who had open positions is just sitting there watching the market move, while they find a new firm.

Theoretically this shouldn’t take too long, in some cases traders could be back up and running tomorrow if the paperwork of going to a new firm can be done fast enough.

Bottom line though: The screwup that caused the big disruption was not necessarily the collapse of MF Global itself, but the fact that many firms that dealt with MF Global assumed that everything would be fine, like it would have been when the CBOT was a partnership.

Here are some quotes from Wilkinson

————————

“Basically … all this stuff started accumulating on Wednesday. A lot of these clearing firms had a chance to make a lot of moves. But people thought it was like the REFCO situation and there weren’t going to be a lot of problems.”

“(Today) I got on the floor early … before they started shutting off everyone’s access.”

“They’re not allowing people with open positions get out of it.”

“This place is decimated … Crickets.”

“Euro options pit probably has half the traders out there.”

“Currency options has a 10th.”

“Not going to let anyone on the floor tomorrow that’s clearing through MF Global.”

“People who have huge positions. They must be pulling their hair out.”

As for traders siwtching to new firms … “They have to sign some release agreements … it shouldn’t be much of a deal. They’ll be up late at night.”

“They could’ve done something. When they saw that MF Global’s stock was going to 40 cents on Friday, a lot of these clearing firms should have been on the ball. They were old school, and thought that it would be seemless.”

Read more: http://www.businessinsider.com/eric-wilkinson-interview-on-mf-global-2011-10#ixzz1cRwmvAWF

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Jamie says:

November 1, 2011 at 11:41 am

Reading and rereading the teachings of Jesus and Buddha I came away with something quite different about heaven and treasure. From what I gleaned from their wisdoms was that we had to become the treasure and that heaven resided within us. It is a choice to create heaven on Earth….or anywhere else our souls may go.

Namaste

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