Nov. 1: MF Global Holdings Ltd filed for bankruptcy protection yesterday in the US after a tentative deal with a buyer fell apart, marking a stunning failure for CEO Jon Corzine who tried to turn the more than 200-year-old futures brokerage into a mini-Goldman Sachs.
The meltdown made MF Global the biggest US casualty of the European debt crisis, as the brokerage paid the price for the former Goldman CEO’s big, risky bets on sovereign debt.
The Chapter 11 bankruptcy filing came after talks to sell a variety of assets to Interactive Brokers Group Inc broke down earlier on Monday, a person familiar with the matter said. However, the bankruptcy filing by MF Global Holdings will not have any immediate impact on the working of its Indian subsidiary.
The US parent has a 70 per cent stake in MF Global Sify Securities India Pvt Ltd. The rest is held by Sify Technologies.
The Indian entity offers equities and derivatives trading to retail customers and provides clearing services to financial institutions. The company is a member of the Bombay Stock Exchange and the National Stock Exchange as well as two commodity bourses — MCX and NCDEX. It is also a depository participant with NSDL and CDSL.
Sources close to the India entity said it was well capitalised and that the overseas developments would not have any impact on its domestic operations. According to the company website, it has an authorised capital of over $14.5 million. In India, the company has around 300 employees. Sources said there were no plans to lay them off.
Market mavens, however, do not rule out the possibility of MF Global’s stake being acquired by another player. There is also talk that Sify Technologies may be interested in raising its stake in the Indian unit from the current level of 30 per cent. However, this could not be confirmed as Vineet Bhatnagar, managing director of MF Sify Securities, was not available for comment despite repeated attempts.
In November 2005, Man Group Plc bought the Indian arm of Refco Inc after it acquired its assets. The venture was subsequently renamed as Man Financial-Sify Securities India Pvt Ltd. In 2007, Man Financial, the brokerage division of Man Group Plc, was spun off in an initial public offering and renamed as MF Global.
