The slide into insolvency by United States stocks and derivatives trading giant MF Global has affected companies in Australia, forcing ASIC to appoint insolvency firm Deloitte as administrator to the group’s local companies.
“The administrator will contact clients to advise how their positions and funds are affected,” the corporate regulator said in a statement yesterday.
The commodities powerhouse is the first US-based casualty of Europe’s debt crisis, and its US bankruptcy filing covers more than US$40 billion in assets.
It has slammed trading in Australia across a broad swathe of activities, including equities and contracts for difference (CFD), as well as grain and wool futures trading.
“ASX 24 has advised ASIC that Grain Futures will not open today and Wool Futures have been suspended to preserve the integrity of the market,” ASIC said.
However, a bigger concern emanating from MF Global’s US$6 billion exposure to European debt is the raft of margin calls aimed at investors in CFDs, complex trading instrument meant to magnify the upside of market gains – as well as the downside.
Brokers linked to three of Australia’s big four banks have more than doubled collateral requirements after ratings agencies Standard & Poor’s and Fitch downgraded MF Global to default.
“Clients of other firms who receive MF Global CFDs should contact their provider directly. The administrator will advise how this impacts clearing for recent trading,” ASIC said.
The regulator said equities trading and futures trading related to the group had stopped, with MF Global Securities and MF Global Australia Limited in administration.
“Trading activity has halted,” ASIC said of equities trading.
“Clients of other firms that use MF Global Securities for trading should contact their provider directly. The administrator will advise how this impacts clearing for recent trading.”
Futures clearing related to the group was also stymied after ASX Clear Futures advised ASIC that MF Global UK Limited had been put into “an event of default”.
“ASIC is working with all affected parties and will continue to advise when more information comes to hand,” it said in the statement.
Meanwhile, US federal investigators had discovered that hundreds of millions of dollars in customer funds had gone missing from MF Global in recent days, triggering an investigation into the company’s operations as it filed for bankruptcy, The New York Times reported.
