Money and Metals

Bloomberg has this update on the Refco mess. "Refco Inc..is shutting down even more of its business as regulators take steps to prevent the owners from taking out money. Refco Securities LLC, the broker's biggest unit, 'will begin the process of winding down its business' with clearing houses for its equity and fixed-income trades, the Depository Trust & Clearing Corp. said in a statement today."

"The Securities and Exchange Commission barred withdrawals of equity capital from Refco Securities and Refco Clearing LLC for 20 days. Such withdrawals 'may be detrimental to their financial integrity or unduly jeopardize their ability to repay customer claims or other liabilities which may cause a significant impact on the markets or expose customers or creditors to loss,' the SEC said."

"'If Refco doesn't convince customers over the next several days that it's a financially sound institution, there is a very serious chance they could have to file for bankruptcy protection,' said Robert Heim, a former U.S. Securities and Exchange Commission enforcement attorney."

"Depository Trust said Refco Securities, 'which is currently in full compliance with the membership requirements of all subsidiaries, remains in business for the purpose of winding down its outstanding positions.' Depository Trust is the biggest clearing house for Treasury, corporate and municipal bonds, mortgage-backed securities, credit derivatives and emerging market debt."

"Refco Securities pledged to Depositary Trust..that it won't seek any new business save for that needed to close out positions. It remains unclear whether Refco is taking similar steps with its futures business."

"'A lot of people are fearful there may be more fire behind the smoke,' said Pat Arbor, former chairman of the Chicago Board of Trade. 'It's very important to come forward in a public fashion with as much transparency as they can. That's not occurring.'"