Posted on 11/04/2011 9:31:03 AM PDT by mojito
Call it the mother of all margin calls: Up to 50,000 former customers of bankrupt broker MF Global must find some $1 billion in additional collateral almost overnight, or be forced out of their trades.
Come Friday, with the mass transfer of commodity trading accounts from Jon Corzine's fallen firm to six of its erstwhile rivals, margin clerks will be wrapping up a reckoning of how much additional money is needed to cover millions of positions. Clients who can't quickly meet their margin will have to liquidate, making for a tumultuous day's trade.
A court order to move the trades late on Wednesday brought only marginal relief to clients who have been essentially frozen out of their funds and positions since Friday. While accounts will now be transferred more quickly, only 60 percent of the collateral will be moved to the new brokers.
That figure may yet fluctuate as brokers scramble on Thursday to work out the details, but the net result is still likely to mean that customers will be forced to post a hefty sum within a day or two. Many of MF Global's mainly small-scale clients may fail, triggering a mass liquidation of both short and long positions that may roil markets.
(Excerpt) Read more at reuters.com ...
>> triggering a mass liquidation of both short and long positions that may roil markets.
I bet there’s money to be made as a result, by those who know what they’re doing.
Too bad for me that I’m not one of those. ;-)
dire.
Chris Dodd - Barney Frank - Paul Sarbanes - Dick Durban - John Corzine
Anbody see a pattern here?
The golden hero’s of the left?
Don’t forget the ladies...Nancy Pelosi, Maxine Waters, and Rod Blagojevich (our esteemed former governor - he just looks like a ladyboy).
“Golden” would not have been a description I would have used.
Gladiators of the left who destroy private wealth and capital markets with amazing devestation. That’s how I would have described them.
Moochelle says for you to be quite and eat your peas!
But it's funny how none of those geniuses in the OWS crowd seem to have noticed.
Where he's at, he's probably married to somebody named Bubba and is probably busy making their first baby.
And yes, you can get pregnant that way. Where do you think lawyers come from?
ping of disgust
Someone correct me if I’m wrong. $1 billion in collateral would be about $12 billion of leveraged commodities contracts. If say even half of those contracts have to be sold because of margin calls, that would flood the market with about $6 billion worth of commodities, probably more. I’ll bet most of these contracts are oil that has been strung along for the last 2 years or so.
Good point.
If I had an MF account, I’d be HAPPY to be forced out of my trade, rather than to have it hanging out there while I was unsure of how to contact my broker or my ability to execute and change positions.
Not that I’d be happy, of course, that my broker had violated the segregated funds rules in order to try and cover up a trade gone bad that was driven by an egomaniacal CEO trying to show he was back in the big time game.
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