Monetary Authority of Singapore Annual Report 2011/2012
Our Work

Safeguarding the Interests of Customers of MF Global Singapore Pte. Limited

On 31 October 2011, MF Global Holdings Ltd. (MF Global) filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code. When MF Global Singapore Pte. Limited (MFGS) appointed provisional liquidators the following day, over 10,000 customers (including more than 4,000 customers who traded through MFGS’ financial institution partners) were affected. Over 80% of these affected customers were retail clients.

MFGS began operations in Singapore in 1996, and was a trading and clearing member of the SGX. Besides securities, futures and options contracts, it offered leveraged foreign exchange trading and contracts for differences to corporate and individual customers.

In the aftermath of MF Global’s bankruptcy filing, MAS’ immediate priority was to safeguard customers’ interests and work with the company and its appointed provisional liquidators so that an orderly winding down of MFGS’ operations in Singapore could be achieved. At the same time, SGX arranged for the transfer of MFGS customers’ outstanding positions and margins to other members for business continuity. Positions that were not transferred were closed out, and the remaining margins were transferred to MFGS’ provisional liquidators on 30 November 2011. However, the closing out of positions for leveraged foreign exchange contracts, and contracts for differences, took MFGS a longer period of time to complete as they were not traded on exchanges and MFGS had to wait for information on these closed out positions from its counterparties.

To expedite the recovery of customers’ funds, MAS liaised with relevant foreign regulators to facilitate the return of customers’ moneys and assets held in overseas financial institutions and exchanges to MFGS’ provisional liquidators. The provisional liquidators updated MAS that some US$427.4 million of customers' segregated and proprietary funds had been recovered as at 31 March 2012. This represents about 95.4% of the estimated amount provisonally accountable to customers.

On 8 February 2012, the Singapore High Court sanctioned the provisional liquidators’ application for the proposed interim distribution of up to US$350 million of the segregated and proprietary funds of customers collected by the provisional liquidators to MFGS customers who were entitled customers for purposes of the interim distribution. MAS worked pro-actively with MFGS’ provisional liquidators to ensure customers’ queries and concerns were attended to. As of 28 May 2012, the entitled customers have received interim distributions totalling about US$266 million.

The failure of MF Global, coming just over three years after the collapse of Lehman Brothers Holdings Inc. (Lehman), reinforces the importance of sound risk management practices and controls in financial institutions. Where the winding-up of financial institutions is inevitable, as was the case for the Lehman and MF Global entities in Singapore, MAS will work with relevant stakeholders to protect the integrity of the financial sector and safeguard the interests of customers.