The rapid collapse of MF Global has impacted many of the industry's technology providers that have been left with unpaid invoices and broken contracts.
Sources tell Wall Street & Technology that a number of financial technology firms are owed money by the defunct futures and commodities broker, which filed for bankruptcy on Oct. 31, 2011.
A list of MF Global Holding's unsecured creditors and shareholders includes Caplin Systems Ltd., owed $427,520; Headstrong Services, an IT consultant, owed $3.9 million, Bloomberg Finance, LP, owed $276,064, according to a story in Bloomberg News, which cites the company's bankruptcy filing and related court papers filed in the Manhattan bankruptcy court.
In fact, Caplin Systems and Elliot Management Corporation, a bill processing provider, were also named to an unsecured creditor's committee of the collapsed U.S. futures brokerage, alongside JP Morgan, Bank of America and Wilmington Trust Co., Reuters reports on Nov. 7.
Financial technology vendors who provided trading systems and other services to MF Global are lining up behind the accountants, lawyers and bondholders of the collapsed futures and commodities brokerage firm, once led by Jon Corzine, the former CEO of Goldman Sachs and ex-governor of New Jersey.
"Caplin is one of the companies that has suffered from MF Global," said an industry source, who requested anonymity. Caplin, a London-based provider of single dealer platforms, was working on a big project for MF Global in Chicago, notes the source familiar with the situation.
According to the industry source, it costs several hundred thousand dollars a year to license Caplin's single dealer platform, which enables companies to deliver real-time information over the web. Companies like Caplin may have hired staff to work on the project in anticipation of revenues, suggests the source.
A spokeswoman for Caplin Systems in London declined to comment. "At this time, we are not giving interviews," said the spokeswoman, who released a prepared media statement from Paul Caplin, the company's CEO and founder. "MF Global has been a very good customer of Caplin's and we're saddened by the company's demise. We are fortunate that Caplin's business is growing strongly at present, so for us our business continues as usual."
The firm's web site lists MF Global as a client, and states the broker selected Caplin's technology for its multi-asset eCommerce offering. Other clients of Caplin include Barclays Capital, Citi, Credit Agricole and Fannie Mae.
The demise of MF Global could potentially impact other technology vendors due to lost consulting dollars, product development dollars and licensing fees that could amount to significant losses, says the industry source.
Earlier this week, Patsystems, a provider of screen-based dealing systems for futures and options markets said it also is suffering a financial loss by the collapse of MF Global, its largest client. Patsystems said the brokerage firm owed it money -- 900,000 pounds sterling, or approximately $1.4 million -- at the point of its collapse.
Following a preliminary assessment of the financial damage from MF Global, Patsystems expects revenues and profits will be lower by approximately 500,000 pounds, or about $779,000.
The shortfall in revenues from MF Global has led Patsystems to consider a possible takeover offer from ION Trading, a technology firm that currently owns 29 percent of the company and is its largest shareholder. ION has valued each share in Patsystems at 14 pence or 20 cents per share, according to Monday's statement. Based on its market cap of 29 million pounds, ION is valuing the software firm at $45 million. ION has until Dec. 26th to announce a firm intention to make a formal offer.
Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio