Insight: Two firms flourish in frenzied MF Global aftermath

Mon Feb 6, 2012 1:14am EST
 
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By Jeanine Prezioso and Cezary Podkul

NEW YORK (Reuters) - The mad rush to move client money out of MF Global Inc. after its collapse left two firms with the bulk of customer accounts, while other brokerages emerged with only minor gains from the chaos of carving up a multibillion-dollar business.

The process, according to interviews with more than half a dozen industry executives, was a scramble: a patchwork of urgent phone calls, emails, "handshakes" and news gleaned from press reports read by executives who were asking - and being asked - to take on MF Global customers during a month-long effort to transfer more than 25,000 accounts and some $2 billion in collateral.

MF Global's fall presented a rare opportunity for any one of a dozen independent Futures Commission Merchants (FCM) to quickly gain valuable new customers from one of the world's most active commodity houses - a welcome boost for mid-tier firms who are fighting to survive in an industry beset by ultra-low interest rates and the advent of electronic trading.

The result: Two of Chicago's oldest, most venerable independent brokers saw a combined $1.2 billion increase in segregated customer funds in November, their biggest one-month increase in more than three years, according to a Reuters analysis of Commodity Futures Trading Commission (CFTC) data.

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GRAPHIC: Picking up the pieces after MF Global: link.reuters.com/zek46s

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R.J. O'Brien Associates, a founding member of the Chicago Mercantile Exchange that started trading in 1914 as a cash butter and egg specialist, saw a November inflow of customer accounts of almost $800 million, an increase of 31 percent. The gain was nearly five times its monthly average increase of $175 million over the past three years, the analysis found.   Continued...