Futures warning [Archive] - Effective Volume

11-04-2011, 09:36 AM

I wrote in the comments to Pascal's daily note yesterday that there would not be large scale liquidations in futures because of MF Global. However, this article suggests otherwise, and says the NY markets (metals, energy) could be particularly affected in the coming days:

http://www.reuters.com/article/2011/11/03/us-mfglobal-margin-idUSTRE7A27Y020111103

As the article notes, both longs and shorts would be liquidated, which might net, but volatility should increase.

asomani

11-04-2011, 12:24 PM

Thanks for the heads up, Bob.

Planning for the worst, hoping for the best...

adam ali

11-04-2011, 02:22 PM

http://www.marketwatch.com/story/missing-mf-global-funds-at-jp-morgan-report-2011-11-04?link=MW_home_latest_news

adam ali

11-04-2011, 02:31 PM

Now JPMorgan is denying it has the missing MF Global funds - wacky

11-05-2011, 10:54 AM

Expect margin calls for CME Group contracts Monday:

http://www.moneylife.in/article/cme-increases-margin-call-markets-will-be-under-pressure/21187.html

Maintenance margin has been increased to equal initial margin, a 15% to 35% increase, depending on the product.

CME Group owns the CME, CBOT, NYMEX and COMEX, so all the major contracts will be affected.

11-05-2011, 02:05 PM

CME clarifies:

http://kiddynamitesworld.com/the-cme-margin-notice-that-has-everyone-in-a-tizzy

11-09-2011, 10:16 AM

It looks like most of the risk from forced unwinds in futures contracts is behind us, though many positions will be still be liquidated this week in response to margin hikes by brokers.

Re: MFG, it looks like there will be an initial 60% payout of cash balances to be announced in the coming week. The form will be posted to the trustee's website (http://dm.epiq11.com/MFG/Project/default.aspx). For anyone that may have posted securities as margin or have any specific property at MFG, forms were posted this morning under "Notices" to transfer them.

These requests are being processed first come first serve, so best to get them in ASAP. Based on the lethargy of the trustee, my opinion is that it will take many months if not years to recover any additional funds after these initial payouts and transfers.