Clients of bankrupt commodities and currency brokerage house MF Global Canada Co. are once again able to sell any existing holdings that are traded through huge U.S. futures-market operator CME Group Inc., but it’s unlikely they will regain full access to their accounts before next week.
KPMG Inc., the trustee appointed to oversee MF Global Canada when regulators obtained a bankruptcy order for the firm Nov. 4, issued an advisory Thursday that it “has put processes in place that will enable customers … to place liquidating trades with respect to positions traded through the CME.” KPMG advised investors to contact MF Global Canada to place their orders.
Earlier in the week, KPMG also made arrangements to enable liquidation trades on equities and equity options that went through Fidelity Clearing Canada ULC. But given MF Global Canada’s strong focus on commodity and financial futures trading, the CME liquidations represent a more significant step for beleaguered customers.
“We still don’t have access to every market,” noted Rozanne Reszel, president and chief executive officer of the Canadian Investor Protection Fund (CIPF), which requested the bankruptcy order so it could safeguard investors’ money after MF Global Canada’s U.S. parent, MF Global Holdings Ltd., went into bankruptcy Oct. 31.
She noted, for example, that MF Global Canada’s customers still can’t liquidate trades through the InterContinental Exchange (ICE), Europe’s dominant commodity futures market operator and clearance house, which also offers agricultural futures products in North America.
Investors had been trapped in their trading positions since Canadian regulators suspended MF Global Canada’s trading privileges on Nov. 1. The suspension order indicated that customers would still be allowed to liquidate existing positions, but due to the confusion and restrictions surrounding the bankruptcy of the U.S. parent, it proved to be all but impossible.
Investors are looking at next week, at the earliest, before they will regain full access to their accounts. KPMG is trying to arrange a “bulk transfer” of all the accounts to other brokerage firms, but the move remains delayed while KPMG sorts through MF Global Canada’s finances.
With Friday being Remembrance Day – a holiday for many banking functions in Canada – the bulk transfer almost certainly won’t take place before next week.
Should the bulk transfer be dragged out much longer, some clients are going to run into an additional complication: The next contract expiration for the popular U.S. crude oil futures expires at the end of next week, which, in theory, would force investors still holding those contracts to take physical delivery of the oil.
“The clock keeps ticking here,” said an MF Global Canada source. “Next week, we’re going to have some issues.”