Metals clients of failed U.S. broker dealer MF Global's British unit face delays in their positions being transferred to new brokers after a problem with London Metal Exchange (LME) data slowed the migration process, industry sources said on Tuesday.
Metals traders said on Monday that clearing house LCH.Clearnet, which is handling the migration of positions, had told them it planned to make transfers by last Friday, but this had not happened.
A source with knowledge of the situation said on Tuesday the process of transferring positions had partly been bogged down by a problem with LME data.
The source said MF Global and the LME would work together throughout this week and coming weekend to reconcile all outstanding positions.
A whole batch of data was lost last Monday. That's one of the issues that has been holding everything up. The LME is working very hard on it, and the FOA (Futures and Options Association) is aware of it, the source said.
The source did not say how or by whom the data had been lost. Most positions have been reconciled, the source added.
A second industry source said that there had been a problem with reconciling and transferring positions.
LCH.Clearnet said it had started client position transfers on Monday.
We are empathetic with LME's and MF Global's hard work at the weekend to reconcile their books, which finally enabled LCH.Clearnet to commence transfers yesterday, the clearing house's managing director Alberto Pravettoni said in a statement.
An LME spokesman said he was not aware that any loss of data has prompted any delay. The FOA was not immediately available for comment.
Another industry source said the process had been slower and more complicated because MF Global UK's metals customers were smaller and more diverse than those of the company's U.S. operations, and because the LME does not conduct its own clearing, unlike other exchanges.
In a note to LME clearing members on Tuesday, the LME and LCH.Clearnet said instructions to transfer LME positions to a new clearing member must be received by 1700 GMT on Tuesday.
It also said it had transferred a significant number of clients throughout last week across multiple markets.
Most U.S. customers of MF Global by Monday had regained access to their U.S. accounts with new brokers. But the process of untangling accounts in various assets outside the United States has moved more slowly.
In Britain, administrators KPMG said on Monday a total of 954,000 positions were open out of the 1.6 million positions in place when MF Global Holdings filed for bankruptcy protection on October 31.
The delay in transferring positions was partly to blame for slow trading on the LME on Monday. Volumes were thin again on Tuesday.
(Additional reporting by Luke Jeffs; Editing by Anthony Barker)