mf global and etrade, page-10

email from commsec

Dear Client,

Yesterday an administrator was appointed to our OTC CFD counterparty, MF Global as a result of its parent company, MF Global Holdings Inc., and MF Global Finance USA Inc. filing for chapter 11 bankruptcy in the United States.

On being informed of this appointment, CommSec immediately suspended its OTC CFD business and started working with MF Global Australia, its voluntary administrators and other counterparties to close out open client positions so as to determine applicable closing prices in an orderly manner and minimise any delays associated with this process. This process could take a number of days (or weeks), particularly for illiquid stocks.

CommSec’s OTC CFD model provides safeguards that are not available with models that are utilised by some of its competitors. CommSec entered directly into an agreement with customers to provide OTC CFDs and had a separate wholesale relationship with MF Global Australia. This means that your counterparty is CommSec and therefore CommSec can commit to the return of any funds owing to you in a timely manner.

We will be contacting you in the coming days to confirm the closing prices of your OTC CFDs and the timing of the return of any funds owing to you. Please be advised that your statements and the trading platform will currently be showing incorrect or inconsistent information for your account at this point in time.

CommSec offers both OTC CFDs and ASX CFDs. CommSec’s ASX CFD business continues to operate and is not impacted by these events. The ASX CFD model also includes a central counter party in ASX Clear that provides strong protection for CFD clients.

We understand that this may be a significant inconvenience and we will keep you updated on the situation. If you any questions or require further information please contact the OTC CFD desk on: 1300 307 853.

Regards,

Stephen Karpin
Managing Director