The liquidation will be orderly so long as they do it quickly, as very few actively traded accounts are likely to be in a margin call state at present. The longer it takes them to liquidate, the more positions will go into the red as traders aren't able to respond to market moves. Unfortunately process-oriented accountants have been brought in - an ominous quote from SMH:
A spokeswoman for Deloitte said the accounting firm was ‘‘undertaking a process to reconcile all client accounts’’ at MF Global.
This could take some time, she said.
They've already made the first mistake by stopping traders from closing their own positions. The nightmare scenario would arise if the market kept falling with traders locked into a lopsided net long position (a reasonable assumption given recent market action) for an extended period.
With luck they've already closed out, in which case there's not much to worry about imo.
