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Thursday, Apr 24th

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Bulk of MF Global positions in Europe still open

LONDON/KUALA LUMPUR (Reuters) - 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 -2.49%, news) 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 canceled 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."

IN TALKS ON SALES

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 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.

Financial Advice Gleaned From a Day in the Hot Seat

When I started writing this column almost three years ago, one of my goals was to figure out what the wealthiest Americans knew and pass along those lessons to middle- and upper-middle-class readers.

More from NYTimes.com:

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This past Monday, I put that idea to the test, spending the afternoon in a Manhattan town house with eight wealthy men who are all members of an investment club called Tiger 21. I was there to hear an unvarnished critique of how my wife and I save, spend and think about money.

Each of the 180 members of Tiger 21 has a net worth of at least $10 million, pays $30,000 in annual membership fees and commits to spending one day a month with other members. Nearly all of them made their money -- they didn't inherit it -- and most are men.

I had asked to sit in on one of the group's signature sessions, the portfolio defense, but a few weeks ago, the members invited me to be in the hot seat. I jumped at the chance. Beyond looking at how money is invested, the portfolio defense is intended to force members to discuss their wealth in the broadest terms.


Chester Higgins Jr./The New York Times
The members of Tiger 21, an investment club, during one of their signature sessions.

I had heard horror stories. One member was told he needed to lose a lot of weight if he was going to get people to invest in his new fund. Another was chastised for telling his children that he had lost his money in the financial crash so that he would not have to talk to them about his immense wealth.

Michael Sonnenfeldt, the founder of Tiger 21, used the term "carefrontation" to describe what happens in a portfolio defense. The assessments are meant to be direct, unsettling and possibly painful to hear, Mr. Sonnenfeldt told me. But the goal is to get members to think differently about what they are doing with their investments and about everything in their lives that is affected by their wealth, from their family to charities.

"It's not meant for the faint-hearted," Mr. Sonnenfeldt said. "This is a process that some people could clearly find offensive or discomforting."

What I experienced was rough, but it was also thought-provoking. The value to me -- and to anyone given a similar opportunity -- was that the members challenged everything about my assumptions on saving and spending. Here's some of what I took away.

OUR MISTAKES In the week leading up to this, I worked with Joel Treisman, an executive coach and the chairman of one of Tiger's 17 groups, to gather up all of our financial reports.

I was confident that the group would think my wife and I were in good financial shape. We save a good percentage of our income. We don't have any debt beyond mortgages and a car payment. We probably spend a bit too much on food and pet care, but we don't run up credit card bills to do it.

The members were warm and welcoming as we filled our plates with poached salmon, grilled asparagus and buffalo mozzarella from the buffet. But as soon as we were seated, it was all business. And I was immediately on the defensive. There were two big surprises but also blunt advice and some thoughtful questions about our portfolio.

First, the surprises. The group agreed that we did not have enough life or disability insurance. We both have insurance that would cover about three or four years of earnings if one of us died. This seemed sufficient to get past a few years of sorting things out. The group disagreed. Going from two incomes to one would mean a radical rethinking of our life.

We needed more sizable policies to give us the freedom to sort through things. Though we both carry disability insurance, the policies are old and do not reflect our current income. They would also cover only 50 to 60 percent of our old base salaries. The members thought we should buy individual policies to add to this.

The second surprise was about our savings. We have been saving about 15 percent of our post-tax income. Alan Mantell, a lawyer who made his money in real estate, development and investment, said the issue was not how much we saved but how we thought about spending.

"You need to ask, 'What can I afford to spend versus what do I need to spend?' " he said. We could be saving more money for retirement -- or in case something bad happens -- if we cut back on things we did not really need, he said.

All the members agreed that we should sell our vacation condominium. "You need to become more liquid," said Thomas Gallagher, the former vice chairman of CIBC World Markets. "If something bad happens, it's easy to get rid of a dog walker; it's hard to get rid of a house in Naples."

6 Steps to Skirting Holiday Debt

While the holidays are no doubt a time to celebrate with friends and family, there is such a thing as too much holiday cheer. In fact, last year the Consumer Reports Holiday Shopping Poll found that 13.6 million Americans are still juggling debt from last season after getting a little too into the gift-giving season.

To spare consumers from suffering the same fate in 2011, MainStreet talked to budgeting experts about the steps you can take now to make sure you don't accumulate too much debt come January.

Consider Hidden Expenses

"Planning for holiday spending should follow the framework you use for your overall financial life," says Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial. She suggests consumers write down all of their anticipated expenses before setting a budget, though this written game plan should address more than just the gifts you plan on giving.

"Holidays are so much more than that," de Baca says, adding that consumers should consider including travel, food, parties and clothing for said parties to their list of expenses. Once you do this, you can prioritize spending and budget for each event you need to attend/throw in addition to each person you need to shop for, decreasing your chances of spending more money than you can afford.

Pursue All Shopping Alternatives

"It's important to start thinking about [holiday shopping] early," Clarky Davis, spokesperson for CareOne Debt Relief Services, tells MainStreet. She says that thinking about shopping options in the fall or even summer months can help consumers find cheaper gift alternatives. For instance, they may have time to visit thrift stores, other secondhand shops or off-price retailers to find low-priced designer items or brand names.

De Baca suggests looking into homemade gifts and considering buying things in bulk. For instance, she says "you can buy a case of wine" instead of heading out to the liquor store right before each holiday party you attend.

She also says you can make charitable donations in a person's name in lieu of gifts, since you don't have to assign a dollar amount to the gift.

Eat Out Less

A few months before the holidays, you can cut out certain expenses in an effort to save. One easy expense to cut out is your inclination to frequent restaurants, especially given all the holiday parties you'll be attending in November and December.

"Eating at home is a time-tested way to hold onto your dollars," says Kevin Gallegos, vice president of Freedom Debt Relief. "Funnel the savings to repay credit card or other debt or build a nest egg."

Don't Shop on an Empty Stomach

Once you are ready to hit the stores, you should be well-rested, well-fed and not in a rush to go anywhere else.

"When you're tired, hungry or rushed, you make snap decisions," Davis points out, and these aren't always good for your wallet. She suggests heading out early in the day or, better yet, before the season is officially under way, since you're less likely to be enticed by the holiday décor or purported discounts retailers advertise at the height of the holidays. What other factors can negatively influence your spending?

Put Away the Plastic

As much as it pains this reporter to admit it, you might want to go easy on the old credit card in the months leading up to the holidays.This is because, as de Baca puts it, a credit card "is the fastest way to get in an overspending situation."

"It's easier to stick to a budget if you only pay with cash," says Andrea Woroch, consumer savings expert for The Frugals, a network of savings websites that includes CouponSherpa.com. "Even debit cards make it easy to overspend, a fact that likely won't hit you until the monthly statement arrives. Having to part with actual greenbacks makes it much more real."

Go Easy on the Gift Cards

You also might want to skip out on overloading your shopping cart with gift cards, no matter how popular an item they may be. This is because gift cards proudly advertise just how much the purchaser has elected to spend on the recipient, and people may opt for a higher-priced piece of plastic in an attempt to not look cheap.

"[Consumers] may spend $25 instead of $20, $5 more than they intended to," Davis says. Instead, electing to buy a small gift without the price tag on it will help you stay within your allotted budget.

Job market improves modestly as unemployment falls

WASHINGTON (AP) -- The American job market improved modestly in October, and economists looking deeper into the numbers found reasons for optimism -- or at least what counts for optimism in this agonizingly slow economic recovery.

The nation added 80,000 jobs. That was fewer than the 100,000 that economists expected, but it was the 13th consecutive month of job gains. Fears of a new recession that loomed over the economy this summer have receded.

The unemployment rate nudged down, to 9 percent from 9.1 in September.

"Those are pretty good signs," said Michael Hanson, senior economist at Bank of America Merrill Lynch. "We're hanging in there."

No one looking at Friday's report from the Labor Department saw a quick end to the high unemployment that has plagued the nation for three years. The jobless rate has been 9 percent or higher for all but two months since June 2009.

The government uses a survey of mostly large companies and government agencies to determine how many jobs were added or lost each month. It uses a separate survey of households to determine the unemployment rate.

The household survey picked up a much bigger job gain -- 277,000 in October, and an average of 335,000 per month for the last three months. The household survey picks up hiring by companies of all sizes, including small businesses.

The household survey is more volatile and less comprehensive than the other survey, and is not followed as closely by economists. Still, job growth in the household survey has not been this strong for three months since the end of 2006.

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