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LONDON/KUALA LUMPUR (Reuters) - Nearly two-thirds of positions from the UK unit of MF Global were still open on Monday, a week after it filed for bankruptcy protection, sparking frustration about delays in moving business to new brokers and dampening volumes in metals trading.
U.S. exchanges, meanwhile, have cut margin requirements on some accounts from MF Global to limit the fallout on futures markets from the collapse of the broker.
UK administrators KPMG said 954,000 positions were open out of the 1.6 million positions in place when MF Global Holdings Ltd filed for bankruptcy protection on October 31.
Traders on the London Metal Exchange said turnover was thinner than usual partly due to delays in transferring MF Global positions to new brokers.
"Nothing has happened yet. We are waiting for it every hour. Therefore customers are reluctant to put on any more new trades before they know what has happened with the old ones," a metals trader said.
An oil broker in London said his firm had sent transfers to ICE at the beginning of last week but was still waiting.
"They are still stuck, and no transfers are taking place. Our clients are waiting. It's very confusing. We don't know if the positions will be at the original prices or not."
Tamas Varga at brokers PVM Oil Associates in London called for changes in how client positions are handled in a bankruptcy and also in how regulators treat firms that move into risky speculative trading.
"There. . . seems to be a lot of confusion about the way the exchanges and their associated clearing houses have handled and are continuing to handle the bankruptcy and account holders' positions," he said.
"There should be a distinct separation and understanding amongst all involved in trading -- and clear thinking about the differences in regulating those who take on proprietary risk in the course of their business and those who don't."
UK administrators said they had unwound the entire foreign exchange portfolio consisting of 25,000 trades with a notional value of $60 billion.
They were also in talks about selling parts of the MF Global business in the UK, KPMG's Richard Heis said in an interview.
"The ... operation is not saleable as a total entity, but there are numerous discussions going on with various potential acquirers of part of the business," he said, declining to give further details.
Exchanges CME Group and IntercontinentalExchange Inc took action over the weekend to reduce margins of MF Global clients.
MF Global customers who moved accounts to new brokers were forced to post additional margins because some of the original funds were held back due to a court order.
"The exchanges have lowered the margins to help the transition until the cash arrives," said Jonathan Barratt, managing director at Commodity Broking Services in Sydney.
"While it's a prudent thing that the exchanges are allowing people to transfer the positions away from MF Global, funds should also be transferred as well, instead of having people pay the margins twice."
The CME also asked brokers who have taken over customer accounts from MF Global to not disburse any of the money until at least the close of business on Tuesday as it sought to verify the amounts involved.
Traders had worried that a rush to cover margin requirements on MF Global accounts transferred to other brokers could lead to heightened market volatility.
There was little evidence of this on markets for CME futures such as U.S. crude or wheat on Monday.
But volumes on ASX Ltd's Australian grain futures leapt on Monday, after slowing to a trickle last week, with January wheat trading a record quantity.
The CME said the ratio of the initial margin, paid when an investor has to meet a margin call, has been changed to zero versus the maintenance margin.
Initial margins are higher than maintenance margins to provide an additional buffer against losses.
For example, the maintenance margin on 2011 Nymex crude oil contracts is $6,000, and the initial margin is $8,100, according to the CME website.
The margin reduction for MF Global clients is aimed at providing "market relief to customers whose accounts have been disrupted by this event," the Chicago-based CME said in a statement on November 5.
ICE, which operates the London-based ICE Futures Europe, said that ICE Futures U.S. was temporarily lowering the initial margin rate for speculative accounts to a level equal to the maintenance margin rate for all contracts.
Additional reporting by Emma Farge, Christopher Johnson, Silvia Antonioli, Susan Thomas and Maytaal Angel in LONDON and Antonita Devotta in BANGALORE; Editing by Jane Baird