Nearly two-thirds of positions from the UK unit of MF Global were still open on Monday, a week after it filed for bankruptcy protection, sparking frustration about delays in moving business to new brokers and dampening volumes in metals trading.

U.S. exchanges, meanwhile, have cut margin requirements on some accounts from MF Global to limit the fallout on futures markets from the collapse of the broker.

UK administrators KPMG said 954,000 positions were open out of the 1.6 million positions in place when MF Global Holdings Ltd filed for bankruptcy protection on October 31.

The collapse of MF Global -- the largest U.S. firm to fail since Lehman Brothers in 2008 -- has hit commodities markets across the globe.

Traders on the London Metal Exchange said turnover was thinner than usual on Monday partly due to delays in transferring MF Global positions to new brokers.

Nothing has happened yet. We are waiting for it every hour. Therefore customers are reluctant to put on any more new trades before they know what has happened with the old ones, a metals trader said.

An oil broker in London said his firm had sent transfers to IntercontinentalExchange (ICE) at the beginning of last week but was still waiting.

They are still stuck, and no transfers are taking place. Our clients are waiting. It's very confusing. We don't know if the positions will be at the original prices or not.

ICE, meanwhile, said it had cancelled plans to auction off remaining contracts held by MF Global in the UK.

One metals trader said some of the smaller MF Global clients may have difficulty finding a new broker.

Brokers right now are a bit nervous to lend to companies that have small balance sheets. A lot of MF Global clients were like that ... perhaps new brokers think what's the point of taking on more risk, said Jaspar Crawley, a broker at Triland Metals in London.

Tamas Varga at brokers PVM Oil Associates in London called for changes in the handling of client positions in bankruptcy and also in how regulators treat firms that move into risky speculative trading.

There. . . seems to be a lot of confusion about the way the exchanges and their associated clearing houses have handled and are continuing to handle the bankruptcy and account holders' positions, he said.

There should be a distinct separation and understanding amongst all involved in trading -- and clear thinking about the differences in regulating those who take on proprietary risk in the course of their business and those who don't.


UK administrators said they were in talks about selling parts of the MF Global business in the UK.

The ... operation is not saleable as a total entity, but there are numerous discussions going on with various potential acquirers of part of the business, KPMG's Richard Heis said in an interview, declining to give further details.

KPMG said the $633 million (395 million pounds) in missing client assets -- whose disappearance derailed MF Global's efforts last week to quickly sell a variety of assets -- were unlikely to affect the winding down of the UK business.

(It) is a little hard to make that prediction, but (I have) no reason to believe at the moment that this is a UK problem, rather than a U.S. problem, Heis said.

KPMG said the entire foreign exchange portfolio in Europe had been unwound, consisting of 25,000 trades with a notional value of $60 billion.

The administrator also said it must reconcile client positions before it can start to distribute money to parties with a claim against MF Global.


Exchanges CME Group and ICE took action over the weekend to reduce margins of MF Global clients.

MF Global customers who moved accounts to new brokers were forced to post additional margins because some of the original funds were held back due to a court order.

The exchanges have lowered the margins to help the transition until the cash arrives, said Jonathan Barratt, managing director at Commodity Broking Services in Sydney.

While it's a prudent thing that the exchanges are allowing people to transfer the positions away from MF Global, funds should also be transferred as well, instead of having people pay the margins twice.

The CME also asked brokers who have taken over customer accounts from MF Global to not disburse any of the money until at least the close of business on Tuesday as it sought to verify the amounts involved.

Traders had worried that a rush to cover margin requirements on MF Global accounts transferred to other brokers could lead to heightened market volatility.

There was little evidence of this on markets for CME futures such as U.S. crude or wheat on Monday.

But volumes on ASX Ltd's Australian grain futures leapt on Monday, after slowing to a trickle last week, with January wheat trading a record quantity.

The CME said the ratio of the initial margin, paid when an investor has to meet a margin call, has been changed to zero versus the maintenance margin.

Initial margins are higher than maintenance margins to provide an additional buffer against losses.

For example, the maintenance margin on 2011 Nymex crude oil contracts is $6,000, and the initial margin is $8,100, according to the CME website.

ICE Futures Canada said on Monday it was temporarily lifting a requirement to charge an additional 35 percent margin to non-hedger clients of MF Global and that all accounts could be charged the hedger maintenance margin rate until further notice.

(Additional reporting by Emma Farge, Christopher Johnson, Silvia Antonioli, Susan Thomas, Maytaal Angel and Luke Jeffs in LONDON and Antonita Devotta in BANGALORE; Editing by Jane Baird)