by: Tyler Durden
August 2, 2012
First MFG; then PFG; and next KCG? A little over two months ago Knight Capital, the well-respected brokerage house, purchased a ‘floundering’ futures brokerage – Penson Financial Services. The de minimus $5mm that Knight paid on May 31st for the firms meant (implicitly) that the $411mm of customer funds became ‘useful’. With various firms pulling lines and the math underlying Egan-Jones downgrade, it is natural that an investor would be anxious to ensure that all their hard-earned deposited segregated accounts are, well, still segregated. Have no fear though, as Bloomberg reports, CME, which regulates Knight’s futures business, is “monitoring the situation”. An advocacy lawyer for MFG/PFG clients noted:”Those at Penson should be a little worried;” and so while KCG “actively pursues its strategic financing alternatives to strengthen its capital base” – read D.I.P. plans – one can’t help but wonder whether all that shiny customer cashola is burning a hole in their capital-deficient pockets. It would seem at $2.27 per share, a few others are wondering that also.