MF Global files for bankruptcy but may have found buyer

31st Oct 2011 14:13

The future of derivatives broker MF Global is in doubt after the company, once a subsidiary of Man Group, filed for bankruptcy this Monday morning. The company, headed by former Goldman Sachs executive Jon Corzine, has had its status as a 'primary dealer' suspended by the Federal Reserve Bank of New York, while exchanges such as the Chicago Mercantile Exchange, the Intercontinental Exchange (ICE) and NYSE LIFFE have also placed restrictions on the broker's ability to trade.The Wall Street Journal reports that Jon Corzine, a former New Jersey governor, spent the entire past weekend negotiating in order to find a solution to the company's situation.The Financial Times, for its part, writes that as of yesterday the broker "had been close" to sealing a deal to sell the bulk of its assets to electronic broker and market-maker Interactive Brokers Group.MF Global reported a big quarterly loss last week and lost two-thirds of its market capitalisation in subsequent market action.Corzine took over as MF Global's executive president last year and took on big bets on the Eurozone periphery bond market. Those bets, amounting to $6.3 bn, led to ratings downgrades on the company from the credit agencies, who critized the "lax" risk management practices at the outfit. At this time shares of MF Global are still suspended from trading.Meanwhile, UK hedge fund manager Man Group has moved swiftly to avoid contamination from the MF Global crisis, stressing that "MF Global is an entirely independent company" and that "neither Man nor its wholly owned single managers have counter-party exposure to MF Global."NA