The former customers of bankrupt futures brokerage house MF Global Canada Co. are about to regain access to their money and trades, after an Ontario court approved the transfer of the bulk of their accounts to RBC Dominion Securities – promising an end to two weeks of limbo for roughly $400-million of investor holdings.
Court-appointed bankruptcy trustee KPMG Inc. and RBC separately confirmed Monday that the Ontario Superior Court of Justice had approved the bulk transfer of all MF Global Canada customers’ futures, equity and fixed-income accounts to RBC Dominion Securities, the arm of Royal Bank of Canada that includes futures trading and clearing services.
RBC said it will begin contacting the account holders on Tuesday to “expedite access to their accounts.”
“The transfer of positions will take place over the next few days. We endeavour to provide former MF Global Canada clients access to their account by the end of the week,” said RBC spokeswoman Bev MacLean.
The accounts that RBC will assume represent the bulk of assets investors held through MF Global Canada, which were estimated by authorities last week at roughly $400-million. The only accounts not moving to RBC are foreign-exchange accounts – which an MF Global Canada source described as small, retail spot-market currency accounts that are largely in cash and represent a minor part of the firm’s business.
MF Global Canada’s client accounts have been essentially frozen since Nov. 1, when Canada’s industry regulator, the Investment Industry Regulatory Organization of Canada (IIROC), suspended the company's trading privileges in the wake of the Oct. 31 bankruptcy of the company's U.S. parent, MF Global Holdings Ltd.
On Nov. 4, the Canadian Investor Protection Fund (CIPF) obtained a bankruptcy order for MF Global Canada, paving the way for the appointment of KPMG as trustee to, among other things, locate customer assets and arrange for them to be transferred to another financial institution.
The process was complicated, however, by the confusion and regulatory roadblocks arising from the bankruptcy proceedings of the U.S. parent. At one point, Canadian clients’ accounts residing with CME Clearing – the clearing house of big U.S. futures-market operator CME Group Inc. – were inadvertently transferred to another U.S. clearing institution, and had to be recovered.
InterContinental Exchange (ICE), a major global futures-exchange and clearing-house operator, also reported Monday that all MF Global Canada accounts traded through ICE Futures Canada and cleared by ICE Clear Canada have been either transferred to other clearing institutions or closed. A spokesman for ICE, which operates Winnipeg’s canola and barley futures exchange and clearing house, indicated that the transfer was part of KPMG’s process to restore customer accounts.
“The substantial majority of customer positions were transferred to alternative clearing participants at the request of customers, and the balance of open positions were closed by the clearing house,” ICE said in a news release.