Rogue trade loses MF Global $141.5 million
Interdealer broker MF Global loses $141.5 million
NEW YORK - Interdealer broker MF Global has lost $141.5 million after it was forced to cover trading losses made by one of its employees.
The broker announced today that an error in its order entry system had allowed the US-based trader to put on massive directional trades in wheat futures on his own account yesterday morning. The trades were noticed and liquidated later that morning, but, as MF Global is responsible, it will have to cover the $141.5 million losses he incurred.
The trader, whose name is not known, has now been fired, MF Global said. It added that client funds had not been affected by the trades. The broker had taken a position of several thousand futures contracts on the Chicago Board of Trade, MF chief executive Kevin Davis said in a conference call today.
The Commodity Futures Trading Commission (CFTC) said that it "continues to be in close contact" with MF Global and the Chicago Mercantile Exchange, the designated regulator for the broker. "MF Global is currently in compliance with the agency's regulatory capital requirements," the CFTC added.
Wheat prices have been extremely volatile - winter wheat on the CME varied between $10.65 and $13.34 a bushel yesterday, an almost unprecedentedly wide range.
MF Global was formerly Man Financial before being spun off by the parent company in July 2007.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Regulation
One thing missing from US Basel III proposal: a deadline
Without a deadline, risk teams will struggle to secure resources to begin implementation projects
In simplifying credit risk models, EBA could compound capital costs
Skipping hard yards of internal ratings-based approach might trip higher capital charges and implementation costs
Change fatigue could dim EBA’s credit risk simplicity drive
Revisions may be kept to a minimum as short-term implementation burden weighs on banks
Foreign banks can swerve US Basel op risk capital charges
New proposal offers category III and IV banks op-out from regime, but intragroup trades penalised
BoE’s Bailey expects global consensus on FRTB internal models
Isda AGM: UK is reviewing proposals from US and EU regulators before finalising its IMA rules
DRW chief slams ‘ridiculous’ OCC stablecoin rule
Isda AGM: Wilson warns week-long redemption freeze would deter use of Genius Act coins as cash leg of tokenised repo
Dealers push for more revisions to Basel III endgame
Isda AGM: Goldman, JP Morgan bankers want changes on cross-product netting, CVA and default risk charges
StanChart: UK, EU should copy US ‘commercial’ Basel III
Isda AGM: Exec warns divergent Basel III rules will push trading into less-regulated entities