Reuters is reporting that in September of 2011, nearly two months before MF Global filed for bankruptcy, the brokerage had been in talks with Bank of New York Mellon to merge the two institution's clearinghouse businesses.
Now, the crux of the article is that the firm knew as far back as September that the company would be in trouble unless something was done. (Obviously, they didn't do enough, as the brokerage filed for bankruptcy on Oct. 31 and the investigation into the $1.2 million in missing customer funds continues.) A partnership with another financial institution on one part of their business would've significantly eased capital requirements imposed on MF Global.
From Reuters:
The idea was to effectively merge MF Global's clearing operation with Bank of New York's and to enable the futures firm to maintain less regulatory capital on its balance sheet, these people say.
But. The true gem of the article is the fact that MF Global code named the secretive proposal Project Honeydew, inspired by the "Mellon" in BNY Mellon.
Ultimately, the plan never went through despite the fact that MF Global was in discussion with several other financial companies for a partnership…..
Read more at http://www.businessinsider.com/mf-global-proposed-an-edible-plan-to-save-themselves-from-possible-ruin-in-september-2012-1?nr_email_referer=1&utm_source=Triggermail&utm_medium=email&utm_term=Clusterstock%20Select&utm_campaign=Clusterstock%20Select%20Mondays%202012-01-09
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