Exchanges continue to clear Refco FCM’s trades, DTCC says broker-dealer operation winding down

The New York-based financial services firm's former chairman and chief executive, Phillip Bennett, was charged with fraud earlier this week following the discovery of accounting irregularities.

During these early days of the investigation into Refco by the Securities and Exchange Commission (SEC), the Chicago Mercantile Exchange (CME), New York Board of Trade (Nybot) and New York Mercantile Exchange (Nymex), have all said that they are continuing to clear trades by Refco LLC – the firm’s FCM subsidiary. A statement from Nymex said that “Refco LLC has met and continues to meet all of its obligations at Nymex and is in good standing”.

Separately, the Depository Trust & Clearing Corporation (DTCC) in New York said today that Refco’s regulated broker-dealer operation, Refco Securities, has informed the clearing corporation that it will be winding down its business. According to the DTCC, Refco said that as of today it will not be engaging in any new business, “except to the extent necessary to offset and effectively liquidate outstanding long and short proprietary and customer positions”.

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