Monday, November 7, 2011

CME may have saved some MF Global investors but not all are immune to margin calls

The CME's Friday night, and later Saturday clarification of margin limits to MF Global accounts that were transferred to them after the primary dealer folded may have helped save some account holders who were transferred over to their institution, but it appears the other investors weren't so lucky.  Account holders who were summarily transferred to entities such as RJ O'Brien, are being forced into a margin call because of the lack of equity MF Global sent out for their customers to cover their accounts.

If you are a former MF Global account and you have your account transferred over to RJ O'Brien, or many others, you will have no choice but to fork out a bunch of cash to keep positions on, according to a statement awaiting all such accounts on the RJO website, or else be next in line for broad liquidations. To wit: "Former MF Global customers transferred to R.J. O’Brien were delivered with approximately 75% of the maintenance margin requirement related to their accounts. As a result, every former MF Global account faces a margin call. No excess equity was transferred." - Zerohedge
it is truly coming down to the point where paper investments not only aren't worth the paper they are printed on, but even holding it can end up costing you more than your investment.


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