MF Global computers struggled to cope in final, chaotic days
08 February 2012 | 3678 views | 0
The chaos of MF Global's final days, as it scrambled to meet funding needs, saw computer systems and staff struggling to keep up with the sheer volume of transactions, according to a report from the trustee overseeing the brokerage's liquidation.
In his preliminary report, trustee James Giddens says a three month investigation has traced the majority of the $105 billion-worth of cash transactions made in and out of MF Global in the last week before its bankruptcy on 31 October and another $100 billion in securities transactions.
The transactions reveal that MF Global was using customer money to bankroll its business five days before filing for bankruptcy and that $1.2 billion of client funds is currently missing.
The number of transactions executed in the last week was unprecedented, says the trustee, as the rush to meet funding needs for collateral, margin and customer liquidations led to billions of dollars in securities sales, draws on credit facilities, and a Web of inter-company loans across affiliates.
"The company's computer systems and employees had difficulty keeping up with the unprecedented volumes of transactions. A number of transactions were recorded erroneously or not at all. So called "fail" transactions - where either the buyer or seller fails to deliver the cash or security, respectively - were five times the normal volume during the firm's final week."