Lehman Brothers

MF Global's Asian units may be sold separately

PUBLISHED : Saturday, 12 November, 2011, 12:00am
UPDATED : Saturday, 12 November, 2011, 12:00am


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The provisional liquidators of MF Global's Hong Kong business are looking at selling off the Asian units of the collapsed US brokerage separately, rather than as a package.

Patrick Cowley of KPMG, one of the provisional liquidators of MF Global in Hong Kong, said some bids received for the entire Asian platform were 'very encouraging', but bidders were unable to agree on actual sales terms in the available time frame.

A vital reason was the legal battle arising from the brokerage's Chapter 11 filing in New York, as well as clients and exchanges seeking to unwind positions to minimise exposures.

'This is an unfortunate set of circumstances, especially where, as far as I have seen, prior to the Chapter 11 filing, the Asian businesses were well capitalised, solvent and well managed,' Cowley said.

The brokerage is winding up its Hong Kong operation after collapsing on October 31 in the eighth-largest corporate bankruptcy in US history, having suffered a huge loss on bets on sovereign debt in the euro zone and failed to find a buyer.

Three KPMG partners were appointed on November 2 by the High Court as provisional liquidators of the brokerage's Hong Kong unit.

MF Global's Hong Kong directors 'felt unable to continue their business' after the bankruptcy and are considering 'feedback' from its banks and counterparties, according to KPMG.

The Hong Kong arm, which offers trading and advising in securities, futures contracts and leveraged foreign exchange trading, has been winding down its outstanding positions.

The Securities and Futures Commission has imposed a 'restriction notice' on MF Global, allowing it only to settle outstanding cash market transactions and assert its rights over any client money held overseas.

Louis Tse Ming-kwong, director of VC Brokerage, said it would be easier for companies or brokerages to consider buying MF Global's individual units than the whole Asian business.

'A separate sale would allow the other companies to pick up the unit that fit in their own business and client portfolio well,' Tse said.