STOCK MARKET WATCH - Friday, 17 February 2012

[Demeter]

16. After MF Global, traders hold tight to excess collateral

http://news.yahoo.com/mf-global-traders-hold-tight-excess-collateral-065850005.html

Until last October, farmers and fund managers rarely lost sleep over the extra money that they habitually maintained in their brokerage accounts, confident that it would be there the next morning.

Now, stung by the loss of customer money from the failure of MF Global Inc, many cannot sleep soundly without transferring every spare cent into their own banks overnight.

It is a sea change in the way that traders manage their "excess collateral" -- cash on account that is over and above the margin required to guarantee their trades. It means that floor traders and corn growers are spending more time, and in some cases money, moving cash in a process known as "sweeping."

It is also one the clearest examples of the damaged trust between futures commission merchants and their customers in the wake of MF Global, which had been the country's most active commodity broker. Former clients are still missing over $1.5 billion of their MF Global funds, much of that "excess."