VIEW FROM A TRADER: Bitter day for MF Global and its clients
An MF Global client’s miserable Tuesday as told to Janie Davies
A client’s miserable Tuesday as told to Janie Davies
When copper dropped to $7,635.7 per tonne today, after my broker MF Global was suspended from trading on the London Metal Exchange, I wanted to sell my cash position.
It expires on Friday but I can’t touch it because MF Global trades are frozen.
So I’ve got a stagnant position in a falling market which I could have closed out this morning at a substantially higher price.
What really gets me is that the onus is on me to phone round and look at websites. If you weren’t in Europe and you were out in Asia somewhere, you’d be completely in the dark.
I have spoken to people at the LME and the compliance department is telling me to go through LCH.Clearnet. I haven’t been able to speak to Martin Abbott.
I’ve also been advised by someone else to speak to the liquidators KPMG; they’re sitting on everything and I guess they decide what goes through. And I don’t know what happens if tom positions can’t be approved in time.
Luckily I have another broker. I’ve arranged for an account to be transferred over and it’s been accepted by my other broker but the transfer hasn’t gone through.
What happens when you’re a small private trader and you only have one broker? LCH.Clearnet recommends you choose from a list of alternatives that it provides on its website.
Well, I was on the phone to a ring dealer firm this morning and I asked him about this. They’re having a rush of business from all over the world.
What can they do for a small trader?
“Those guys are too small; don’t touch it. Who can take on small customers in this environment? We certainly can’t,” the ring dealer told me.
And even if you can get a broker, what if you’ve lost your initial margin deposit?
Then you can’t make your initial margins or you variation margins throughout the day.
When these frozen trades are released it’s not going to be orderly trading, is it?
I spoke to a mate, who worked for MF Global.
I’m pissed off but he’s furious.
Not only is his job likely gone, but his shares in MF Global, worth a six-figure sum a couple of months ago, are worthless.
Corzine was a ceo who still thought he was a trader, he said. He’d never liked the fact that Corzine preferred to hang around the trading desks, rather than be out talking to clients, bringing in business.
At other times he’d walk past Corzine’s office and he’d be glued to his screen.
“He shouldn’t have been trading copper, the yen, eurozone debt; he should have been the ceo.”
It’s always the way: the big guys are tearing their hair out.