MF Global, Inc.

From MarketsWiki

MF Global
Founded	2007
Headquarters	717 Fifth Avenue, New York, NY 10022
Key People	Bernard W. Dan, CEO; Karel F. Harbour, CEO Europe; Thomas Harte, CEO New York; Laurence O'Connell, CEO Asia-Pacific
Web site	www.mfglobal.com

MF Global, formerly known as Man Financial,^[1] is one of the world's largest derivatives brokers, accounting for around 10 percent of exchange-traded volumes alongside a significant presence in OTC products and cash securities. The Bermuda-registered group was rebranded and spun off from Man Group in July 2007 through an initial public offering which valued the company at $3.63 billion.^[2]

In Nov. 2009, MF Global announced plans to relocate its corporate headquarters to the U.S. from Bermuda. ^[3]

In January of 2010, it announced it had moved its headquarters to Delaware and was changing its name to MF Global Holdings Ltd.^[4]

MF Global is the world's largest futures retail broker, with over 138,000^[5] active client accounts, and has grown organically and through 18 acquisitions since 1989, including its 2005 purchase of client accounts and other assets from Refco.

The company has a global footprint through offices in New York and Chicago, Bermuda, Toronto, London, Paris, Mumbai, Singapore, Sydney, Taipei, Tokyo, Hong Kong and Dubai. It operates on more than 70 exchanges,^[6][7] and is the largest single broker on most of the leading platforms including the CME and Eurex.

MF Global owned a stake in U.S. Futures Exchange but announced on Dec. 17, 2008 it would exit its interest in USFE by the end of 2008 if it could not find a buyer for its stake.^[8]

Contents 1 History 2 Key People 3 Registration 4 Regulatory Issues 5 References

History

MF Global traces its roots to the sugar trading business started by James Man in England in 1783, which evolved into broader commodities trading before its later transformation into a financial-services business during the 1980s.^[9]

Its former parent, then known as ED&F Man, diversified from its pure cash commodities into commodity futures in the late 1970s, and established the Anderson Man futures brokerage in 1981. It later changed its name to ED&F Man International and then Man Financial, before adopting the current brand following the IPO and separation of the brokerage from the asset management operation.

ED&F Man operated as a partnership through to the 1970s, when it started an international expansion which, by 1983, saw its staff climb to 650 employees. ED&F Man listed on the London Stock Exchange in 1994, changing its name to Man Group in 2000. Its agricultural business, which retained the EDF Man name, was sold to management the same year.

The rapid expansion of the Man Investments unit in the nascent hedge fund management business shrouded many investors from the development of its brokerage unit as global derivatives volumes began their exponential rise at the start of the decade.

Man Financial embarked on a series of acquisitions which expanded its product capability and geographic reach, starting in 1989 with the purchase of the Chicago-based GNP Commodities, and including well-known industry names such as Geldermann, Gerald Metals, Tullett & Tokyo Futures, First American Discount Corp., Australia’s Ord Minnett and GNI.

The purchase of GNI in 2002 was the largest deal until the transformative $323 million acquisition of client assets and accounts from entities of Refco following the U.S. financial-services group’s collapse in late 2005. Only a month a earlier, Refco had closed its purchase of managed futures provider Cargill Investor Services from agribusiness giant Cargill. The Refco deal followed a hotly-contested auction with Cerberus Capital, the private equity group, and boosted Man Financial’s scale in retail and institutional business.^[10]

The acquisitions have continued, with its retail complex augmented in January 2007 with ChoiceOdds, an independent UK-based financial binary trading firm. MF Global plans to list contracts developed by the firm on the USFE.^[11]

On March 17, 2008, shares of MF Global plummeted on liquidity fears.^[12]. The CME,^[13] ICE,^[14] Nymex^[15] and CFTC^[16] issued statements confirming MF Global was in compliance with regulatory and financial requirements.

Key People

Bernard W. Dan was appointed CEO of MF Global on Oct. 29, 2008. He succeeded Kevin R. Davis, who resigned from the company and its board of directors after 17 years with MF Global.^[17] Dan, the former Chicago Board of Trade CEO, was made chief operating officer of MF Global Ltd.’s North American unit, reporting to MF Global’s U.S. head, Thomas Harte, and the company’s global COO, Christopher Smith. The appointment was announced June 12, 2008.^[18] Smith has since left the company.

Executives

• Bernard W. Dan, Chief Executive Officer
• Thomas F. Connolly, Global Head of Human Resources
• Laurie R. Ferber, General Counsel
• Karel F. Harbour, Chief Operating Officer
• Thomas M. Harte, Managing Director of North American Operations
• J. Randy MacDonald, Chief Financial Officer
• Laurence R. O’Connell, Managing Director of Asia Pacific Operations
• Michael K. Roseman, Chief Risk Officer
• James Rowsell, Managing Director of European Operations

Board of Directors:

• Alison J. Carnwath Chairman
• Eileen S. Fusco
• Martin J. Glynn
• Edward L. Goldberg
• David I. Schamis
• Lawrence M. Schloss
• Robert S. Sloan
• Bernard W. Dan

Registration

• MF GLOBAL INC - NFA ID: 0266826

Regulatory Issues

On Feb. 28, 2008, MF Global announced a bad debt provision ^[19] in the amount of $141.5 million. The provision was the result of the actions of a registered representative in a MF Global branch office, who on Wednesday, Feb. 27, while trading in the wheat futures market in his personal account, substantially exceeded his authorized trading limit. The individual involved was terminated immediately. Client funds were not impacted in any way by this event. MF Global held a conference call ^[20] at 11 a.m. EST on Feb. 28 to discuss the matter.

According to a regulatory filing by MF Global Inc. in September of 2009, "one of the Company’s brokers, Evan Dooley, trading for his own account out of a Memphis, Tennessee branch office through one of the Company’s front end order entry systems, Order Express, put on a significant wheat futures position during the late evening of February 26, 2008 and early morning of February 27, 2008. The positions were liquidated at a loss of $141,045,000 on February 27, 2008. The trades were unauthorized and because the broker had no apparent means of paying for the trades, the Company, as a clearing member of the exchange, was required to pay the $141,045,000 shortfall. The exchange and regulators were immediately notified, the broker was promptly terminated, and a public announcement of the loss was made by the Company the next day."^[21]

Subsequently, MF Global was fined $10,000,000 by the CFTC over the incident and an unrelated Natural Gas incident from 2003.^[22][23] The CME Group also fined MF Global $495,000 over the wheat incident.^[24]

References

1. ↑ "F-1 Registration statement". MF Global. Retrieved on November 15, 2007.
2. ↑ Subprime fears hit financial offerings. Financial Times. Retrieved on November 15, 2007.
3. ↑ MF Global Exits Bermuda, Posts Loss. Wall Street Journal. Retrieved on November 5, 2009.
4. ↑ MF Global moves headquarters to U.S. from Bermuda. Reuters. Retrieved on January 7, 2010.
5. ↑ MF Global Declares Quarterly Dividend Payments for Preference Shares. MF Global via Yahoo.com. Retrieved on October 28, 2008.
6. ↑ MF Global Declares Quarterly Dividend Payments for Preference Shares. MF Global via Yahoo.com. Retrieved on October 28, 2008.
7. ↑ Exchange Memberships. MF Global. Retrieved on October 29, 2009.
8. ↑ MF Global to Exit U.S. Futures Exchange. MF Global. Retrieved on December 26, 2008.
9. ↑ Man oh Man!. Futures Industry Magazine. Retrieved on October 29, 2009.
10. ↑ Spoils of Refco auction go to Man Group. Financial Times. Retrieved on November 15, 2007.
11. ↑ Press Release. MF Global. Retrieved on January 22, 2008.
12. ↑ MF Global plunges amid liquidity fears. Energy Risk. Retrieved on March 18, 2008.
13. ↑ CME Group Statement on MF Global in Good Standing at CME Clearing. CME Group. Retrieved on March 18, 2008.
14. ↑ ICE Confirms MF Global Remains in Good Standing. InternContinentalExchange. Retrieved on March 18, 2008.
15. ↑ NYMEX Holdings, Inc. Statement Regarding Its Clearing Members and Financial Safeguards. Nymex. Retrieved on March 18, 2008.
16. ↑ CFTC Statement on MF Global. U.S. Commodity Futures Trading Commission. Retrieved on March 18, 2008.
17. ↑ Press Release. MF Global. Retrieved on October 29, 2008.
18. ↑ Former CBOT Chief Dan Joins MF Global. Crain's Chicago Business. Retrieved on June 12, 2008.
19. ↑ Press Release. MF Global. Retrieved on February 28, 2008.
20. ↑ Conference Call. MF Global Investor Relations. Retrieved on February 28, 2008.
21. ↑ MF Global Inc. Statement of Financial Condition, September 30, 2009. MF Global Inc.. Retrieved on December 25, 2009.
22. ↑ CFTC Sanctions MF Global Inc. $10 Million for Significant Supervision Violations between 2003 and 2008. U.S. Commodity Futures Trading Commission. Retrieved on December 25, 2009.
23. ↑ MF Global faces $10m CFTC fine. Financial Times. Retrieved on December 25, 2009.
24. ↑ CME Fines MF Global $495,000 Over Rogue Wheat Trades. Nasdaq. Retrieved on December 25, 2009.