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Following the move by MF Global Holdings Limited, the ultimate parent company of MF Global Singapore Pte Limited (MFGS), to file under Chapter 11 of the US Bankruptcy Code, other MF Global entities in the UK and Australia have also been placed into administration. The Board of Directors of MFGS has appointed provisional liquidators from KPMG on 1 November 2011 to oversee the winding down of the company. The provisional liquidation is intended to safeguard the interest of customers and achieve equitable treatment for all creditors.
The following FAQs are provided to keep investors updated on the latest developments.
Provisional Liquidation Process
Q1: I understand that MFGS has appointed provisional liquidators. What does this mean?
Provisional liquidation is the process of winding down a company’s business and affairs in an orderly manner.
The business, affairs and property of MFGS will now be managed by the provisional liquidators.
The provisional liquidation is intended to safeguard the interests of the customers of MFGS and ensure that MFGS does not engage in any new trades. During the period of provisional liquidation, no action or other civil proceedings may be taken against MFGS without the approval of the court.
The provisional liquidation of MFGS does not take away the proprietary rights of its customers, particularly in respect of monies and assets held on trust on a segregated basis, in Singapore and elsewhere. In this regard, the provisional liquidators will endeavour to call in assets of investors wherever situated.
The provisional liquidators are working with MFGS to verify records, ascertain customers’ ownership to the monies and assets, and take steps to recall monies and assets in overseas jurisdictions. This process will take time. The provisional liquidators have assured MAS that this will be done as soon as practicable.
They will work with the officers of MFGS to contact all customers in due course with information specific to their respective trading account.
Exchange Traded Products
Q2: I have an open position in SGX’s traded derivatives. What will happen to my position?
On 3 November 2011, SGX suspended MFGS’ membership on SGX. This does not affect the ability of MFGS’ customers to obtain transfers of their positions on SGX to other clearing members or to close out their positions. SGX has announced that almost all of MFGS’ customer positions on SGX have been transferred to other clearing members or closed out by MFGS. SGX will assist with either option and continue to facilitate customers’ requests until 9 November 2011. Thereafter, remaining positions will be closed out.
Please refer to SGX’s announcement for more information:
http://www.sgx.com/wps/wcm/connect/sgx_en/home/higlights/news_releases/sgx+suspends+mf+global+singapore+pte+limited
Q3: I have an open position in an overseas exchange. What will happen to my position?
The provisional liquidators are working towards closing or transferring all open positions. Where this is not possible, the provisional liquidators will review available options to deal with them appropriately. The ability to close-out or transfer open positions on overseas exchanges has been affected and may continue to be affected by the status of MFGS’ correspondent overseas clearing members or the denial or suspension of its access on overseas exchanges.
Contracts for Differences (CFDs)
Q4: I have an open position in CFD. How can I close my position?
The counterparty of MFGS’ CFD customers is MF Global Australia Limited ("MFGA"), which went into administration on 1 November 2011. The Insolvency Administrator of MFGA issued a Press Statement stating that MFGA’s hedge provider has closed out MFGA’s positions. MFGA has, in turn, closed out the bulk of MFGS’ customers’ CFD positions with MFGA. Given that CFDs are bilateral contracts, it may not be practical to transfer open CFD positions to another counterparty.
The provisional liquidators of MFGS are seeking confirmation on the details of the closed out transactions to confirm their own calculations for MFGS’ close out transactions and where relevant make additional claim for compensation for MFGS' customers. Once the provisional liquidators have this information and are able to determine the amounts relevant for customers, the liquidators will notify the customers accordingly.
Q5: I have no CFD position. When can I take back my margin?
There are a number of reasons why this might take some time. For instance, some funds might be in overseas jurisdictions. The return of such monies and assets will require the provisional liquidators to work with regulators and insolvency administrators overseas to resolve issues relating to these monies and assets. The provisional liquidators will also have to calculate what is due to each investor before any funds can be released.
Leveraged Foreign Exchange (LFX)
Q6: I have an open position in LFX. How can I close my position?
MFGS is the counterparty to its LFX customers and in turn entered into mirror hedging transactions with its liquidity provider. MFGS’ liquidity provider has exercised its right pursuant to the insolvency of MFGS’ US parent to close out all MFGS’ hedging transactions as of 1 November 2011. The liquidity provider and MFGS are working on the relevant close out settlement amounts as the result of the close out. This may take some time. Once the provisional liquidators have this information and are able to determine the amounts relevant for customers, the liquidators will notify the customers accordingly.
Safety of monies
Q7: Are my monies safe? Am I going to get all my money back?
Under the Securities and Futures Act, MFGS, as a holder of a Capital Market Services licence, is required to segregate the monies and assets of a customer.
Customers’ monies and assets which are segregated can only be utilised by MFGS in accordance with the Securities and Futures Act. Segregated customers’ monies and assets should not be co-mingled with MFGS’ own monies and assets.
Where customers’ monies and assets are denominated in foreign currencies and MFGS has deposited such monies and assets with overseas financial institutions, the return of such monies and assets will be subject to relevant arrangements in those jurisdictions, including the positions taken by the regulators and insolvency administrators of the MF Global entities in those jurisdictions. We understand that the provisional liquidators are taking steps to recall customers’ monies and assets that are held in overseas jurisdictions. Where appropriate, MAS will assist in communicating with the relevant foreign regulators.
The timing for any return of such monies and assets to MFGS would depend on several factors, including the position taken by the regulators and insolvency administrators of the MF Global entities in those countries. The provisional liquidators will be working with MFGS closely to contact all customers in due course with information specific to their respective trading account.
Others
Q8: What can I do now?
The provisional liquidators will need time to verify the records and to recall monies and assets in overseas jurisdictions. In the meantime, customers should submit requests for withdrawal of credit balances in their accounts to MFGS using the company’s standard withdrawal form.
Q9: How can I lodge a complaint against MFGS?
Customers can call the investor hotline at +65 6866 6796 or send an email to clientsolutions@mfglobal.com.sg. Their complaints will be reviewed by the provisional liquidators in due course. However, at the moment, the provisional liquidators’ main priority is to oversee the winding down of MFGS and to secure customers’ monies. They will require time to do this.
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