November 2, 2011

 

 

After the collapse of MF Global, trading in Australian grain futures and options was suspended on Tuesday (Nov 1).

 

Bourse operator ASX Ltd suspended trading of grains, canola and wool futures and options following MF Global's filing for Chapter 11 bankruptcy protection on Monday.

 

"Trading has been suspended until further notice," said Dougal Hunter, manager of ASX's agricultural derivatives.

 

He said the exchange planned to issue a statement as soon as possible, but declined to make further comment.

 

Jonathan Barratt, head of Sydney-based Commodity Broking Services, said it was unclear what actions the ASX would take.

 

"It is not a good situation -- I have been in touch with the exchange and they've told me that no decisions have been made but the chances are they will close all positions out of the market," he said.

 

"Obviously their concern is MF had big open positions in the market and obviously makes the market," he said.

 

Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, said MF Global's collapse had thrown the Australian grain market into limbo.

 

"It is too early to speculate on a longer term impact, we hope that the ASX and MF Global can come up with a swift and appropriate resolution to the current issues," said Mathews.

 

Another trader, who asked not to be named, said position transfers from MF to other firms had not been permitted so far.

 

"Clients are quite eager to see how they can limit their exposure but they can't do that with trading suspended," he said.

 

"I guess the exchange is contemplating how they can proceed from here - they've got a few things to consider... one is their exposure as a clearing house for MF Global, another is about ensuring marketing integrity by making sure the resolution is orderly," the trader said.

 

MF Global had actively promoted new initiatives by the ASX such as the introduction of the Western Australian wheat futures contract early last year.

 

The contract was designed to be a benchmark for wheat pricing in South-East Asia as well as help manage price risk.

 

The exchange offers New South Wales milling wheat contracts <0#YVW:>, Western Australian wheat contracts <0#YWK:>, as well as feed barley <0#YUB:>, sorghum <0#YUS:> and canola <0#YVC:> futures.

 

It also offers greasy wool <0#YGS:>, fine wool <0#YFW:> and broad wool <0#YBW:> contracts.

 

The Australian Securities & Investments Commission (ASIC) said in a statement that Deloitte has been appointed administrator to the MF Global group in Australia.