Nice price close for POS, page-56

If have a question about CMC (which in no way should be construed as being confrontational or argumentative. Please take as intended -- as a genuine question).

Does CMC completely segregate their client monies, such that each and every client is firewalled from the actions of other clients and CMC's own positions?

I ask this as a former MF Global (Futures) Australia client, who fortunately received 100% return of my money because I had no active futures positions when they went belly-up. Fortunately, my balance was only nominal in value at the time, just sitting in the cash account. During liquidation different customers were classified according to which activity group they belonged to (i.e. futures contracts, FOREX positions, options, cash only, etc...). We 'cash account' clients eventually received 100c in the dollar. The other groups were less fortunate.

One interesting and rather disturbing piece of information that came to light during the liquidation was, that although customer accounts were 'segregated' accounts (i.e. kept separate from the company's funds), all the customer monies were pooled together! The idea of segregation worked to protect customers, as a group, from any problems that MFGA might inflict on itself with the market positions it would take. Most clients generally understood this. If memory serves me correctly, what was disturbing was the discovery that, as a group, the customer funds were all pooled together, which meant that individual customers were potentially at risk from the actions/mis-actions of other customers within that pool. When MFGA did their job properly and managed individual customer risk accordingly, things were ok. But when it all started to unravel (and very quickly, when it did), then it all got pretty messy. Upshot: various customers, depending on the activity group they belonged to, lost money when all their positions were forcibly liquidated ASAP, due to MFGA's VA. From memory, the pooled treatment of monies created problems for customers that had otherwise profitable positions.

I'm rambling and am having trouble making the central point, which is that customer funds were all pooled together (joined at the hip). This created much angst for many affected customers who were not aware of this and who thought that they were protected by the segregated nature of their accounts, which actually protected them against something else.

MFGA's approach and setup which was the industry norm at the time. Not sure if things have changed since then.

Given my experience with MFGA, I now keep my stock broking account with a dedicated stock broker.

Just my thoughts on a potential sleeper issue from a customer who dodged a bullet.

(Disclaimer: I've tried to be as accurate with these recollections and perceptions as possible, but it's possible that I might have missed a minor detail here or there. Hopefully not a major one.)