Not many people know about the convictions behind how MF global failed. This is how the destruction process works @ Wall Street and MF Global bankruptcy was one of the example of it.

They were very bad in Europe; leveraged 33:1 so there is no space of error when the firm is leveraged like that.

The three lessons that are can be shared from MF Global’s death:

  • Accounting loopholes have to be closed and oversight improved.
  • Non-bank financial firms should have a lead regulator.
  •  Rule-writers should consider “non-systemic” firms as well as “too big    to fail” banks.

But there is a contrast view to it:

More regulation, more rules, Dodd Frank/EMIR/FATCA  and to no purpose at all.

A banker wants to bet his firm on the direction of sovereign debt. If successful, we call him Soros and pat in him on the back. And if not, the firm is closed down. Regulations were pointless, because no rule book can reign in human ingenuity. Continue reading

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