ANT FXCR4NGE

ASRTNGTON FACING
Information Pursuant
to

DC

COMM1ON
20549

PAGE

SECFILENO
8-18704

Section

of Brokers Required 17 of the Securities

and Rule

and Dealers Exchange Act of 1984 17a- Thereunder

REPORT FOR THE PERIOD BEGINNING

04/01110

AND ENDING

o3/siJu

MMJDDTY

MM/DDY
IDENTIFICATION
Official

REGISTRANT NAME OF BRORER-DEALER

MF

Global

Inc.-

Use

Only

NO

ADDRESS OF PRINCIPAL PLACE OF BUSINESS

Do not
4408

use P.O Box

No
20th

LaSalle Street

FL

ZTON$
tsr-

eRNCH

Chicago City

Illinois State

60605
Zip Code

NAME AND TELEPHONE

NUMBER OF PERSON TO CONTACT

IN REGARD

TO THIS REPORT
312-548-1400
Area Code
Telephone

Christine Serwinski

No

ACCOUNTANT

mENTDICATI0N
in this

INPNDENT
2Vaine
-.lf

PUBLIC
state

ACCOUNTANT
last
first

whose

opinion

is

contained

Report

individual

middle

name

PricewaterhouseCoopers One North Weaker Drive Number and Street ADDRESS

CI1ECE

LLP
Chicago
City

IL
State

60606
Zip

Code

ONE
Certified

Public Accountant

Public

Accountant not resident

in

Accountant

United

States or

any of

Its

possessions

FOR OFFICIAL USE ONLY

5Cjaims

for

exemption must

from

the requirement by statement

that

the

annual

report

be

covered

by

the

opinion
basis for

of the

an

independent See

public
section

accountant

be supported

of facse

cunstanees

relied

on as the

exemption

240.17a-5fr.f _________________________________

-2-

OATH OR AFFIRMATION
Christine

Serwinski_
financial

swear

or affirm that
and
supporting

to

the

best

of

my

knowledge
to the

and
the

belief

the

accompanying

statements are true

schedules further

pertaining

firm of

MF

Global

1n

as of

March 31 2011
proprietor solely as that of

and correct
officer

swear or affirm that neither has any

proprietary

company
account

nor any partner

classified

principal

or director

interest in any

customer

WIRSHA

Notary Public

CARTER MCKINNE NOTMYPUSLC .$TAT OF LUNOS MY CO

This report Facing Page Statement of Financial Statement of Operation Statement of Cash Flows

contains

check

all

applicable

boxes

Condition

Statement of Changes in Stockholders

Equity of Partners or Sole Proprietors

____

Capital

Statement of Changes Computation Computation

Information 1503-3 Reconciliation Capital Under

in Liabilities

Subordinated

to

Clathis

of Creditors

of Net Capital
for

Determination of Reserve
to the Possession

Requirement

Pursuant

to

Rule 15c3-8 Rule

Relating

or Control Requirements

Under

including

appropriate

explanation of the computation

for

of Net

Rule 15c3-1

Reserve Schedule

Requirements
of Segregation

Under

and the Computation Rule 15c3-8 Exhibit and Funds

Determination of the

Requirements Act
the audited to methods

in

Segregation

Pursuant to

____

Commodity Exchange
Reconciliation Condition with

between
respect

and unaudited
of consolidation

Statements

of Financial

in

An

Oath or Affirmation
of the

Copy

SIPC Supplemental Report any material

inadequacies audit

Report describing
existed since the

found

to

exist

or found to have

date

of the previous

For conthtiona

of confidential

treatment

of certain

portions

of this

Jing

see section

240.17a-5e8

pwc

Report of Independent

Auditors

To the Board

of

Directors

and Stockholder

of

MF

Global

Inc

In

our opinion
financial

the

accompanying
of

statement

of

financial

condition

presents

fairly in

in

all

material

respects

the

position

MF

Global
in

principles

generally

accepted

at March 31 2011 the 0Company This financial the United States of America

no

conformity

with accounting
is

statement

the

responsibility

of the

Companys management

Our

responsibility audit of

is

to express
in

an opinion on
accordance

this financial auditing

statement standards

based on our audit

generally the audit
material

We
in

conducted

our

of

this

statement

with

accepted
to

the United

States

America

Those

standards

require that of
financial

we

plan

and perform
is

obtain

reasonable

assurance includes statement

about

whether

the statement
test

condition

free

of

misstatement
in

An

audit

examIning on
assessing

basis

evidence
principles

supporting

the

amounts

and disclosures
estimates
that

the

financial

the accounting
overall financial

used and

significant

made

by

management
reasonable

and evaluating the

basis
for

statement

presentation

We

believe

1Lvp
our
audit

provides

our opinion

LE

May28

2011

PricewaterhcuseCooper

LLP One 3122982001

North

Wacker

Chicago IL 60606

ji2 298 2000

www.pwc.com/US

MF

Global

Inc

Index

March3l2011

Pages
Report of independent Auditors

Statement of Financial

Condition

Notes

to

Statement of Financial

Condition

3-26

MF

Global

Inc
of Financial

Statement

Condition

March 31 2011

Assets Cash
Restricted Securities Securities Securities

67718100
cash and purchased
segregated
securIties to resell

9646819800
including

under agreements

$7639105800

at

fair

value

5015254800 1852232000 5250064800

borrd
owned
at fair

value

$4354357000
and
clearing

pledged net of allowance

Receivables
of

brokers

dealers

organizations

$1491400
customers and
affiliates

1880494500
non-customers net of allowance
of

Receivables Receivables

$6534800

217868100 4195914400 1570300 4225000 41587600

net

Other receivables Memberships

Furniture
in

exchanges and

at cost leasehold of

market value Improvements

$12770700
net of accumulated

equipment and

depreciation intangible Deferred

amortization of

$28439500
amortization of

assets

net

accumulated

$93877100

36700500 72713300 16250500 28299413700

tax assets

Other assets
Total assets

Liabilities Liabilities Securities Securities Securities

and

stockhoIdeis

equity

sold

under agreements

to repurchase

including

$3439212600

at

fair

value

11610669300 702356100 4877608200 353033000 8233668300 1525467700 63805300 27366607900

loaned

sold not yet purchased

brokers dealers

at

fair

value organizations

Payables Payables

and

clearing

customers and

non-customers

net affiliates Paysbies Accrued expenses and other Total

liabilitIes

liabIlities

Commitments

and

contingencies

Note 16

Subordinated borrowings Stockholders equIty

Total
liabilities

55000000
377805800
and
stockholders equity

28299413700

The

accompanying

notes

are

an

integral

part

of

this financial

statement

MF

Global

Inc
of Financial

Notes to Statement

Condition

March 31 2011

OrganizatIon

Global

USA

Inc

Inc the Company United Holdings

or

MFGI
Which

Is

wholly..owned

subsidiary parent

of
Is

States

corporation
Is

1he

ultimata

MF MF

Global Global

Holdings Holdings

Ltd

Ltd
MFGI
dealer
is

Delaware

corporation

publicly

traded

on the

New

York Stock Exchange

registered
Is

with the Securities

and

Exchange

Commission

CSEC
Inc

as

securities broker-

and

member
Exchange

of the Financial

Industry

Regulatory

Authority

Board Options
Clearing

CBOE
The

FINRA

Chicago income

National

Securities the

Clearing

Corporation and

Fixed

Corporation

F1cc
with the

CBOE

Is

Companys

designated

self-regulatory

organization

MFGI

is

also registered

Commodity

Futures Trading

Commission

CFTC as
an
Industry

futures
self-

commission
regulatory

merchant

and

is

member

of the National

Futures Association Mercantile

Chicago Kansas

member of the Chicago Additionally MFGI is agency Board of Trade New York Mercantile Exchange
Board of Trade and
Minneapolis Grain

Exchange

NYMEX
The

CME

Intercontinental

Exchange

City

Exchange

CME

is

the

Companys

designated

self-regulatory organization

In

February of 2011 the Company

of

Bank

New
and

York
of

This designation

was named one enables MFGI

of to

20 primary dealers
serve

to the Federal

Reserve

as

counterparty
directly In

to the Federal

Reserve
auctions

Bank

New

York

fri

provide

analysis

open-market and market

operations
Intelligence

participate to

U.S

Treasury

the Federal

Reserves

trading

desks

The

Company

provides

brokerage

services

to

customers and
through

affiliates affiliates in

on
or

United

States

securities

and futures
correspondent
in

exchanges
clearing

and on overseas brokers

exchanges
is

The Company
loan

also

engaged

Independent and proprietary principal agreements

trading

U.S government

and corporate

securities futures
activities

repurchase

and resaIe

as

well

as stock/bond

borrow and

stock/bond

Slgnfficant

Accounting

PolicIes

Use of Estimates
The
preparation of the statement
in

of

financial

condition

In

conformity

with accounting
to

principles

generally

accepted

the United

States

of

America

requires

management
ilabilitles

make

estimates

and

assumptions assets and liabilities at the date

from those

that affect

the reported

amounts

of assets of

and

and

disclosure

of contingent

of the statement

financial

condition

Actual

results

may

differ

estimates

Fair

Value

of

Financial

Instruments Standards Codification

Fair
in

The Company adopted the provisions of Accounting Value Measurements and Disclosures
received
to sell

ASC 820
as the price between
that

FaIr

ASC 820
liability

value

is

defined

would be

an asset or paid measurement

reflected

to

transfer

an orderly transaction
Securities condition

market
not

participants yet

at the are

date or an

exlt price of
financial

owned and
at fair

securities sold

purchased

on the statement
for

value

and

are recorded

on

trade date

basis
its

Fair value
financial

these

instruments

includes

related

accrued

interest

The
In

Company
accordance
product
fixed

values with

instruments

based on quoted mid

market prices
its

where

applicable

market convention the Company values

Is

financial

instruments securities

based on

class

Fair value securities

generally

bid

or

price

for fixed

income

owned and

ask

for

income

sold not yet purchased

If

Exchange

traded

products the

are valued

based on
fair pricIng

quoted value

market prices based

listed

prices

or quotes

are not available executable

Company

determines

on comparable

market transactions

broker

quotes or independent

MF

Global

Inc
of Financial

Notes

to Statement

Condition

March

31

2011

sources with reasonable

for

levels

of

price

transparency

Fair

value

measurements

are not adjusted

transaction

costs

Management
statement of

estimates
financial their

the aggregate

fair

value

of other

financial

instruments accrued reported

recognized

on the

condition

Including

receivables

payables and
are
either

expenses
at fair

approximates
short-term
in

fair

value as such
interest at

financial

Instruments

value

or are

nature bear
estimates

current value

market rates or are subject to frequent

debt

repricing of
financial

Management
condition
to

the carrying
fair

of the subordinated
interest

on the statement

approximates
repricing

value as the loans bar

at current

market rates and

are subject

frequent

Credit

risk

Is

component
or

of

fair

value

which

is

based on the

loss

the

Company would
holds
in

incur

if

counterparty

an issuer of

securities to

or other Instruments

the

Company

fails credit

to

perform
quality

under
third

its

contractual

obligations
securities
its

the

Company
the

or

upon

deterioration

the

of

parties

whose
In that

or other Instruments
activities

the

Company holds
generally with

To reduce

the

Compans

creditexposures counterpartles

operating
it

Company
and

enters

permit

to

offset

receivables

pyabies

into agreements with Its such counterparties and obtain

from the counterparty on an upfront and ongoing basis The Company margin and/or collateral monitors and manages its credit exposures daily The Company considers the impact of credit risk In the valuation of its assets and its own credit of Its risk in the valuation counterparty
liabilities

that are presented

at fair

value

Financial value

instn.iments

are categorized as
further In

Into

three-level
In

valuation

hierarchy gives

for

disclosure

of

fair

measurements quoted

discussed markets

Note

The

hierarchy

the highest

priority

to

unadjusted

prices
to

active

for identical

assets or

liabilities

and
are or

the lowest
sufficient

priority

unobservable

inputs basis

Level
to

measurements
current
pricing

Level market

measurements
is

active
for

if

there

transactions
pricing

on an ongoing
is

provide

information

the asset

liability

Information

released

publicly

and

price quotations inputs

reflect

do not vary substantially

either over participants

time or

among market makers

use
in

Observable
or
liability

would

pricing

the asset

assumptions market based on market date obtained from sources

the
is

independent
In

of the reporting of

entity
liability

The

fair

value

hierarchy

based on the observability

In

of inputs
fair

the valuation hierarchy reporting

an asset or
the
all

at the

measurement
detailed
for

date
analysis
fair

determining
Its

the appropriate

value

levels period

Company
and
are

performs
liabilities

of

assets

and

liabilities
is

At

each

assets inputs

which the

value

measurement

based on as follows

significant

unobservable

classified

as Level

The three levels are described

Level
for

Unadjusted

quoted

prices or

in

active

markets
Level

that

are accessible of
financial

at

the

measurement

date
fair

identical are

unrestricted

assets

liabIlItIes

consists

instruments

whose

values

determined using quoted

market prices

Level that is

Quoted markets
in

prices

for identical

or

similar

assets

or

liabilities

in

markets
liability

that

are less active

for

which there are few transactions term models

Included
in

for

the asset or
financial

that

are observable
for

substantially the are estimated

full

Level

are those

instruments

which

fair

values

using

or other valuation various

methodologies
inputs

These

models are
time

primarily yield

industry-standard
volatility

models
observable
well

utilizing

observable

including prices
for

value

curve

factors

current

market and

contractual

the underlying

financial

instruments

as

as other relevant economic

measures

Level

Prices

or valuation

techniques

that

require

Inputs
little

that

are both

significant

to

the
is

fair

value

measurement

and

unobservable

i.e

supported
fair

by

or

no market activity
utilizing readily

Level

Instruments comprised of financial models or methodologies utilizing

whose

value

Is

estimated are not

internally

developed
from objective

significant

Inputs

that

observable

sources

MF

Global

Inc
of Financial

Notes March

to Statement

Condition

31

2011

Securities

Transactions
securities

Customer

transactions

are recognized

on

settlement

date

Principal fbced

and

proprietary securities

securities

transactions
profit

primarily

represent

the

Companys

Investment

In

income

The

related

and

loss are recorded

on

trade date

basis

Interest

income
is

related

to

resale

agreements

securities

lending

and

collateralized

financing

arrangements

recognized

on an accrual

basis

Stock-Based

Incentive accounts

Compensation
for

The Company
measures
grant date
fair Is

stock-based services

compensation
received
Is

in

accordance

wW

ASC 718
during

whIch
the

the cost of value

employee
of the
to

for

stock-based over the

compensation
the period

based on which an

award

That cost
in

recognized
for

employee Income

required

provide

service

exchange

award

Taxes
Is

The Company
Federal sharing

Included

in

the consolidated

federal

and state income

separate return

tax returns

of

Holdings
to

and state Income taxes are determined on agreement

liability

basis pursuant

tax

between

the

Company
this

and

Holdings
deterred
liabilities

The

Company accounts
for

for

income

taxes

under the
financial

method

Under

method

taxes are provided

differences

between
tax

reporting
will

and tax bases of assets and

in

and

are
to

measured reverse

using the

enacted

rates

that

be

effect

when
Under

these

differences

are

expected

Securities

Purchased

Agreements

to Resell

and

Securities

Sold Under Agreements to

are generally
certain

Repurchase
Transactions

invoMng

resale

agreements
Transactions

or repurchase cleared through

as

collateralized

financings

agreements FICC and under

accounted
resale

for

non-FICC

and

repurchase agreements
are reported

with the
In

same

counterparty with

executed

master netting agreement

on

net basis

accordance

ASC

210-20

Collateralized financing the

arrangements used and

liquidity

In

connection

with proprietary

trading

activities

expose

Company

to

issuer default
collateralized

risk

To the extent the Company

with counterparty
right to

has financed
for

position of

through

financing

arrangement
generally

example by means
the

repurchase transaction

the counterparty

has the

require
calls for

Company
from

at

to meet margin any time during the term of the repurchase agreement decreases in the market value of the collateral that the Company posts

resulting

financing
for

Accordingly

repurchase agreements because the value of the

If

and

other

similarfinancing underlying

fools

create

liquidity

risk

the

Company
whether
to the

collateral

the repurchase
Issuer-specific

agreement concerns
it

decreases

because
collateral the value defaults value

of

market conditions

or

because
to

there are

with respect

the

Company
collateral

will

be required

post additional impaired

margin which for example

to
If

may
the

not readily

have

If

of the

became
the

permanently

the issuer of the

collateral to

collateral
full

on

its

obligations

Company

would

be required

repurchase the

at

upon
could

the expiration

of the repurchase

agreement

causing

Company

recognize

loss

which

be

significant

Certain or sales
fair

of the of

Companys purchases
result

of

securities

under agreements

to

resell

resale agreements
at

securities

under agreements
of the

to repurchase
fair

value
for

as those

Companys
repurchase

value

repurchase agreements are carried election The Company elects the fair value

option

resale date

and

open

settlement

or that are not

agreements that do not settle overnight or do not have an accounted for as purchase and sale agreements such as

repo-to-maturity instruments
to

transactions

more accurately

The Company has elected the fair value option for these reflect market and economic events in Its earnings and to mitigate

MF GobaI Inc
Notes
to Statement of Financial

Condition

March

31

2011

potential

Imbalance
carrying

in

earnings
for certain

caused
assets

by using

different

measurement

attributes

La

fair

value

versus

value

and

liabilities

From time

to

time the Company

enters

Into

securities financing maturity

in

transactions

which

mature on the
for these assets

same

date

as the underlying

col%ateras

stated

The Company accounts

transactions forward sale

fair

under the prescribed commitment

guidance

Included

ASC 860
of

as

sale

of

financial

and

purchase

or conversely purchase

as

purchase
sale

financial

assets

and
at

forward estimated

commitment
value

The

forward
for

and forward under

commitments

are valued

and

are

accounted

as derivatives

ASC 815

Restricted

Cash and Segregated

Is

Securities

The Company
aside

obligated

by rules mandated
to satisfy

by

Its

primary

regulators

the

SEC and CFTC

customer

to

set

cash or

qualified

securities

regulations assets

promulgated including

to protect

assets

At

March

312011

the

Company has

segregated
to

cash

securities

owned and

securities

purchased

under agreements

resell

as follows

Cash

at

banks purchased owned under agreements

to resell

729021200 8638208100 279590500 9646819800

Securities Securities

Resale agreements

in

segregation

include

$2629441900

from

MFGH
owned

Ltd

At March
deposIted

312011

$150366900

of

U.S government

securities

by the

Company

are

as margin with clearing

organizations

Receivables
Receivables

From and Payables

from

to

Customers and

Non-Customers
arising in

and

payebles

to

customers and

non-customers

connection

with futures

and

securities transactions futures contracts

Include

cash margin deposits

and gains and

losses

on open

commodity

from customers and

non-customers

Customer
are held

and

non-customer owned as
collateral

securities
for

consisting

primarily

of

U.S Government

securities

by the Company

receivables

from customers and non-customers and

securities held

as

margin deposits amounting and

to

for trading

Customer and

and

non-customer owned
respectively

by the Company
of

$570482300
options
reflected

$223887400
positions

and
to

the net short value

customers

non-customers
are not of

on futures

amounting
of
financial

$154595400
collateral

and

$13810800
securities organizations held

respectively
In

on the statement has been

to

condition

portIon

of these

the

amount

$187355000
In

deposited

as margin

with clearing

and

carrying

brokers
of

addition

non-customer owned
as collateral

securities the

Company

also

$223632400
Securities Securities Securities lender other
in

warehouse

receipts

Borrowed borrowed borrowed

and and

Loaned
loaned require transactions the the are reported
to

securities

as

collateralized

flnancings with the or

is

transactions

Company Company

deposit

cash or other
collateral
in

collateral

securities loaned

transactions
of

receives

the

form of cash
transactions

collateral
in

The

fair

value

the

collateral

in securities

borrowed and

and loaned on

generally additional
collateral

excess

of the

market value
or

of securities

borrowed

loaned

daily

basis with
of

collateral

obtained
in securities

receIved
daily

the market value refunded as necessary As of March 31 2011 The collateral is borrowed transactions was $7071826800 requIre counterparties
to

valued
collateral

and

the

Company may
transactions

deposit

additional

collateral collateral

or return pledged

pledged

as appropriate

As of March

31 2011

the

market value

of

under securities loaned

was $6007400700

MF

Global

Inc
of Financial

Notes

to Statement

Condition

March

31

2011

In

accordance

with

ASC 860
of
financial

at

March

31 2011
In

the

Company
of

de-recognized

assets
to

and

liabilities

from

the statement against

condition

the

amount

$5292048000

related

securities

borrowed

securities

pledged with the same counterparty

Collateral
All

assets the

the

Company
party

has pledged cannot

sell

as

collateral

in

secured

borrowings

and

other

arrangements

when

secured
of

or repiedge

the assets are reflected

on the Companys

statement

financial

condition

Memberships
Exchange Impairment
value
in

In

Exchanges
used
In

memberships
value
Is

the

Companys

operations
to

are reflected

at cost

or
at

if

an

determined by management

be other than

temporary
the to

an adjusted

that reflects nanagements estimate of the Impairment loss of $521000 2011 the Company recorded an Impairment The Impairment Is the resutt of sustained market values below

Duling related

year ended March venous memberships

value of the

31

the carrying

seats

Furniture Equipment
Furniture using the over

and Leasehold
are depreciated

Improvements
over
their

and

equipment

estimated

useful

lives

of three

to

fIve

years basis

straight-line

method
economic

Leasehold
useful
life

improvements
of the

are amortized or the

on

straight-line

the lesser

of the

Improvement

term of the related

lease

Intangible Intangible

Assets
assets represent
primarily

the

cash paid

in

business

combination are

for

customer on
at straight-

relationships
line

technology
their

assets

and trade names

of 3.5
to

Intangible

assets

amortized are reviewed

basis

over
for

estimated

lives

10

years

Intangible

assets

least

annually

Impairment or when events

not

or

amount

may

be recoverable

During

Indicate that the carrying changes in circumstances March 312011 the Company recorded the year ended trade

an Impairment loss of $742900 related

to

managements On November $2532700

relationships

decision

to discontinue

the

names The impairment is the use of the trade name purchased

research

result

of

2O1O

the

Company
fair

purchased
of the

group

for

cash payment
representing useful
Ufe

of

The

estimated

value

intangible

assets over

acquired
their

customer
of 3.5

was $2027500

and

are being

amortized

estimated

years

Goodwill
Goodwill represents the

excess

of the purchase

price

of

business

acquisition

over

the

fair

value

of the net assets

acquired
to

During

the yarorided

March

312011

earnout
for

payments March
the

totaling

$3606500
purchase

related

prior

acquisition capitalized related

to to

consideration recorded

and

were made and were accounted goodwill During the year ended purchase
of research

as additional

31 2011
of

the

Company $304300
Goodwill

goodwill

the

group

In

amount

Is

not amortized during

and

the

Companys
of

single

reporting

unit

Is

tested
is

at least annually
triggering

for
If

impairment review

the fourth
fair of

quarter value the

to

each

fiscal
is

year or
its

when
the

there

event be
of
Its

the

indIcates the assets

that the
fair

of goodwill

below

carrying

value

and

will

not

recoverable
indIvidual

value

Company
calculate

Is

compared amount

to of

aggregated
if

fair

values

and

liabilities

the

estImated

based

on discounted
recorded recorded
related

2011

the

Company
the
total

represents business

environment

the year ended March 31 cash flows and which an impairment loss of $3810800 related to goodwill The impairment Is the result of an overall decline In the goodwill to the acquired business

impairment market values During

any

Fair value

is

MF GobaI
Notes

Inc
of Financial

to Statement

Condition

March

31

2011

Translation

of Foreign Cunency
liabilities

Assets and
prevailing

denominated
of

In

foreign

currencies

are translated

at

spot

exchange

rates

at the close

business

on the

reporting

date

Receivables

from and

Payabtes

to

Brokers

Dealers and

Clearing

Organizations

Amounts
consist

due from

and due

to

brokers

dealers

and

clearing

organizations

at

March

31 2011

of the following

Due From
Receivables
Securities

Due To
8.429000

from and

payables

to

brokers

and dealers

1534360500 219149300 126984700 1880494500

failed

to delIver/receive payables
to

199019800 145584200 353033000

third

Receivables

from and

deaiing

orgaruatlons

Receivables

and

payables unsettled

from

brokers fee

and dealers Include amounts and

due

from/to

parties

for

margin deposits

trades

rebates execution
deposits

deaiing organizations Payables

to

include

margin

and

brokerage fees Receivables net receivables from unsettled trades

fees

from

dearing

organizations

Include transaction

and

net

payables

for

unsettled

trades

SecuritIes

Purchased

Under

Agreements

to

RussO

and

Securities

Sold Under Agreements to

Repurchase

It

is

the policy of the 31

of the
principal

Company

to

obtain

possession resale

of

collateral

with

market value
counterparty

equal basis

to

or of

in

excess March

amount loaned market value

under

agreements
received

on

As

2011

the

of gross of

collateral

under reverse
with

repurchase
clearing
to

agreements
organizations deposit

was $49689180600
The
collateral
Is

which $110499100
daily

was pledged

valued

and

the

Company may

require

counterparties of

additional

collateral

or return

collateral

pledged

as appropriate

As

March

31 2011

the

market value
discussed
In

of gross

collateral

pledged

under repurchase amounts

received

agreements have been

was $55079480000
against
collateral

As

Note

certaIn

collateral

offset

pledged

As

of

March

31 2011
for

the

Company

had

resale
classified

agreements
within

of

$5015254800
cash and
basis
In

which

Include

the

impact

of netting

resale

agreements

restricted

segregated

securities of
fair

Restricted
financial

cash and

segregated Certain

securities

are presented resale

on

gross

the statement

condition
result

of the

Companys
fair

value resale

as and

of the

Companys
agreements

value

and repurchase agreements are carried at At March election 31 2011 the fair value of these and $3439212600
respectively

repurchase

was $7639105800

In

accordance

with

ASC 860
of financial

at

March

31 2011
related to

the
to

Company when

de-recognized

assets

and

ilabllltles to resell

from

the statement securities sold

is

condition

securities

purchased
the maturity

under agreements
date

and

under

agreements
the maturity with

repurchase
of

of the underlying Including

collateral

the

same as

date

the

resell

or repurchase with

agreement

repurchase agreements

an

affiliate

that

were

collateralized that

Note

11

For these from

specific

repurchase of
financial

transactions condition
collateral Italy faIr

debt European Sovereign for as sales and are accounted are retaIns the

de
risk

recognized of default

the statement
of

the

Company

exposure The
for

to

the

of the Issuer sovereign

the underlying of the

assets comprising BelgIum

this

U.S government
and
Is

securities or forward as

European
repurchase derivative

debt consisting
represents

Spain
value of
to

Portugal

Ireland

commitment

exposure
to

and

accounted

The

value

of the derivative

is

subject

mark

market movements

which

may cause

MF

Global

Inc
of Financial

Notes

to Statement

Condition

March

31

2011

volatilIty

In

the

Companys
will

financial

results

until

maturity

of the underlying

collateral

at

which point

these

instruments

be redeemed

at

par

Amounts

derecognized

as

result

of these

transactions

are

as follows

Contract Value
Securities Securities
Includop

purchased
sold

under

agreements
to with

to

resell

418523800 14380145100
debt and transacted
with

under agreements
cdLereiLzed

repurchase
European Sovereign an affl9e

$7

7154700

Market Value
Seczrltles Securities
Includes

owned
sold
not yet
of

14316892700
purchased
European

417277800
debt lraieacted
wIth

$7433423700

Screlgn

an

aIf$bte

The
and

fair

value

of the forward loss

is

repurchase

commitments

resulting

from the application

of

ASC

860

the associated

immaterial

as 0f March

312011

Securities

Owned

and

Securities

Sold Not Yet Purchased

not yet

Securities

owned and

securities

sold

purchased

at

March

312011

consist

of

SecuritIes Securities

Sold Not Yet

Purchased

Owned
U.S government
Corporate debt securities
securities

4457015800 514415500 278833700 5250064800

4332590100 255809300 289208800 4877608200

Other

At March

31 2011 no
except

securities

owned by
In

the

Company

are deposited

as margin with clearing

organizations

as disclosed

Note

MF

Global

Inc
of Financial

Notes

to Statement

Condition

March

31

2011

income

Taxes

The Company
separate

files

consolidated
In

federa
the states

state
In

and
it

local

income

tax returns

with Holdings

or

Income tax returns

which

solely

does business

The components

of the deferred

tax assets

and

liabilities

at

March

31 2011

are

as follows

Deferred tax assets

Incentive Intangibles

compensation

13251700 40862900 4715700 9860000 1138300 3098200 72128800

Accrued

expenses
losses

Net operating
Depreciation

Bad

debts

Deferred tax Other

Deferred tax

liabilities

13500
assets net
tax assets
Is

72713300
dependent upon
multiple variables of current tncluding available loss

Realization

of deferred future

carrybacks
planning valuation

taxable

income

projections
that

the reversal the

its

temporary

differences
for

and

tax

strategies allowance

U.S

GMP requires
all

Company

continually

assess the need

against

or

portion

of

deferred

tax

assets

The Company
loss position
is

is

in

three-year

cumulative evidence the weight

pre-tax
In

loss

position

at

March

31 2011
of deferred
is

cumulative tax

considered

negative
that

assessing
this

the

realizability

assets

The Company
significant

has concluded
loss costs

given

negative

evidence the

diminished three

due to

non-recurring

and

expense
to

items recognized unprofitable to the

during business
this
Is

prior

asset Impairments concluded

positive tax
that

and
Is

related

exiting

lines negative

The Company
evidence
realize
Its

years Including has also

there

sufficient

positive

evidence

overcome

The
deferred

evidence

Includes
first

three

means by which
of
existing

Company

able to

fully

assets

The

is

the reversal

taxable
In

temporary
forward

differences period

Company
that future

forecasts

sufficient

taxable

Income
relied

the carry

Second The Company

is

the believes

projections

of

income
It

can be

upon

because the income

forecasted

based

on

In fiscal 2011 Most notable in this regard began to see evidenced key drivers of profitability that to the significant are plans and assumptions relating changes to the Companys compensation

structure conditions

implemented
Third

in

fiscal

2011
its

Increased

trading

volumes

and

other

macrn-economic
strategies

in certain shifts

of
in

key operating

jurisdictions

the Parent permit

is

has tax planning

uthization

which

include

potential

Investment

policies

which should
this

of the

Companys The amount

reduced were
to
in

net operating

losses

Management

believes

strategy

prudent

and

feasible

of the deferred the near

it

tax asset considered the

realizable
results

however
significantly

could

be

significantly

term

if

Companys

actual

are

less than
In Its

forecast valuation

If

this

is likely that the Company occur allowance Loss carryforwards gMng rise

would
to

record

material
overall

increase

portion

of the

net deferred

tax asset either

do

not expire

or expire

no

earlier

than

fiscal

2031 FASB
the

The Company
In

follows

ASC 740
of

formerly

interpretation

No 48
gross

Accounting

for

Uncertainty of

Income Taxes

As

March

31 2011

Company has

unrecognized

tax benefits

$1799000

10

MF Goba1 Inc
Notes to Statement
of Financial

Condition

March

31

2011

The Company had

unrecognized

approximately at

tax benefits

March

$451000 accrued 31 2011

would

for

the estimated

Interest

and

penalties

on

The

total

gross

unrecognized
In

tax benefits
It is

if

recognized

affect

the

Companys
will

effective in

Income tax rate

next twelve

future

periods

expected as
this

that unrecognized
result

tax benefits statutes

significant

decrease
or

the

months

by an Immaterial

amount

of expiring
to

of

limitations

sethements
of operations

The Company
or
financial

does not expect

of the

change

have

impact on the

results

position

Company
amount
of unrecognized tax benefits
is

reconciliation

of the beginning

and

ending

as follows

Balance
Additions

at

April

2010
taken during the current period

3537000 307000

based on tax positions

of
prior

Release

period

positions

Settlements

1638000 407000
1799000

Balance

at

March

31

2011

In to

many cases
examination

the

Companys

uncertain

tax positions

are related

to

tax

years that remain subject

open

by the relevant tax authorities which tax year is 2004 for certain states In the United

vary by States

jurisdiction

The Companys

earliest

Leases

The Company whereby

the

enters

Into

renewable
to

one

year operating

lease
to

agreements Finance

with
for

MFG
use of

Finance
furniture

Company agrees

make

monthly

payments

MFG

and

equipment

The Company
unaffiliated

also

leases
for
Its

certain

office

premises equipment

and

computer
annual

hardware
rental

from

parties

own use

At

March

31 2011
are

the

minimum

commitments

under non-cancelable

leases

for office

premises

FIscal

Year

Ended March

31

CommItments 8993700 7979900 8962600 9020900 9168800 42632000

2012 2013 2014 2015 2018

Thereafter Total

86757900
the

At

March

31 2011

Company
to

had

$2000000
of
its

letter

of

credit

secured

by firm owned

U.S

government

secuiitles

guarantee one

leases

Segregation

of

Funds
under the CommodIty
to

The

Company

is

required

Exchange
assets
at

Act

and

under Rule 15c3-3 of the

to

Securities

Exchange

Act of 1934

segregate

least equivalent

balances

due

to

customers trading

on domestic and foreign futures

and

securities

markets

11

MF

Global

Inc
of Financial

Notes to Statment March 31 2011

Condition

At March
included

31 2011

assets segregated of
financial

or held condition

in

separate

accounts

under applicable

regulations

on the statement

are as follows

Pursuant to Commodity Cash at

Exchange Act 220403000

Banks
Clearing Securities organizations

28279400
under resale agreements
at

owned and

receivables

Banks
Cleaiing organizations

4403128500 3588977500
net

Due

to

exchange
Total of

dearing organizations
segregated assets

71878500

Iriduded

on the statement

___________
8168909900

financial

condition

Items

not recorded of of

on the statement
securities

of

financial

condition

Market value Market value

Total

owned

by customers owned
by

443931300

commodity

options

customers net

153574100
8457267100

segregated

assets

Foreign secured Cash

at

assets related

to

foreign

futures

activities

banks owned
brokers Total of

32774700
and
receivables

Securities

under resale agreements

at

banks
net

269070000 960512900

Due from

including

receivables assets

under resale agreements

included

foreign
financial

secured conditIon

on

the statement

1282357600

Items

not recorded

on the statement

of by

financial

condition

Note 126551100

Market value of securities owned Market value

of

customers owned by customers net

commodity

options

1021300
1387887400 9845154500

Total

foreign

secured

assets

Total

segregated

and

foreign

secured

assets

Pursuant to Securities

Exchange Act requirements 472724000

Cash

at

bank

At

March

31 2011
assets

the
In

Company
of

Is

in

compliance due
to

with these

segregation

requirements

and

holds

segregated

excess

amounts

customers

Securities of the

purchased
totaled

CFTC

$8638208

under agreements to resell that are subject to the segregation 100 at March 31 2011 and are included in restricted on the statement
of
financial

requirements

cash and

segregated

securitIes

condition

Fair

Value

Measurements

and

Derivative

Activity

The Company has

quality

framework
to

for

measuring
value

fair

value

and

fair

value

hIerarchy

based on the
for fair

of inputs

used

measure

fair

which enhances

disclosure

requirements

value

12

MF

Global

Inc
of Financial

Notes

to Statement

Condition

March

31

2011

measurements
Inputs
alt

The Company
the

utilizes

valuation

techniques

that

maximize the use of observable

applied
this

and

minimize

use
that

of

unobservable
to

inputs

The
at

Company has
fair

framework

to

financial

instruments

are required

be reported

value

The Company considers own credit spreads when

Securities

the impact

of counterparty
fair

credit

risk

in

the valuation

of

its

assets

and

its

measuring the

value

of

liabilities

owned

securities

repurchase agreement value

certain

sold not yet purchased certain resale agreements certain borrowed and derivative transactions are canled securities
of the valuation are techniques at
fair

at fair

The

following of assets

is

description
liabilities

the

Company
recurring

applies basis

to

the

major

categories

and

that

measured

value

on

U.S

Treasury

securities

are

marked from composites

are generally categorized

of end-of-day
In

quoted
fair

prices value hierarchy

Accordingly

these

securities

Level

of the

Equities

Include

mostly exchange-traded Accordingly these

corporate
securities

equity securities are categorized

and

are valued of the

based on
fair

quoted

market prices

in

Level

value

hierarchy

Exchangeraded
valued
fair

or

listed

derivative

contracts

the

Company

carries are

actively in

traded Level

and
of the

based on the quoted

hierarchy

market prices

Accordingly

they are categorized

value

u.s agency
prices

debentures

are generally or dealer

valued
If

based on the composites

applicable

of

end-of-day

trade

or executable
pricing

bicker

quotes

Otherwise they are priced from

categorized
in

independent
the
fair

sources

U.S agency

debentures

are generally

Level

of

value

hierarchy

Mortgage-backed
liquid private-label

securities residential

primarily

consist

of

U.S government
and
pricing

mortgage

pass-throughs mortgage
categorized
in

mortgage-backed
priced from

securities

collateralized

obligations Level

They
fair

are generally value

independent

sources and

of the

hIerarchy

Corporate

debt estImated

securities

consist

primarily

of

U.S

corporate or
for

bonds

The

fair

value

of corporate

bonds

is

using recently
pricing

executed

transactions

market quoted
valuation

prices

where bonds are

observable
generally

Independent
In

sources are also used

of the
fair

Corporate

categorized

Level

value

hierarchy

Certain

resale

and

repurchase are generally

These and

transactions

agreements are carried at fair value under the fair value option valued based on Inputs with reasonable price transparency
In

are therefore

generally

categorized

Level

of

the

fair

value

hierarchy

Shares
available

held

due

to

demub.ralization

of

exchanges

are priced

based

on the
in

latest

market data
shares held at

typically

the

most recent bids or transactions

completed

certain

cases

due to demutualization of exchanges are priced using models with inputs that are observable these securities are categorized as Level valuation When model Input prices are observable

Where
Level

there

is

limited fair

trading

activity

for

these

Instruments

these

securities are categorized

as

of the

value

hierarchy

13

MF

Global

Inc
of Financial

Notes March

to Statement

Condition

31

2011

The

following
level

table
within

summarizes
the
fair

the

Companys

financial

assets

and

liabilities

as of March

31

2011 by

value

hierarchy

impact Level Level Level NettIng

of Total

Meets
Restricted
securities

cash

and

segregated

U.S

government agency debt

securities

and

federal

obigatlona
securities

220124500

44894000 14572000

255.018500 14572000

Corporals Secudties agreements Total

restricted

purchased
to resell

under

1408209900

1.408209900

cash
securities

and 220124500 1487675900 1687.800400

segregated Securities

ovmed
securities

U.S

government

and

federalagency

debentures

3104453100

348934200 1003628300 10411000 1003628300

U.S

government
securities

mortgage

backed

Piie label
sacajiltise

moitg.ge.backed

10411000 504004500 193402590 54553200 28097200

Corporate Equities Equity Options Shares Total

debt

securities

504004600 193402600 54563200 28097200 1206200 3.381712200 1079200 1868057200 296400 296400

options on held
futures In

exchanges

2.580800 5250.064800

securities

nemed

SecurIties

purchased

under

enremantsbreselua
Rocelvablea-affjlates3

17521632300 1.009409000 $3601836709

9882526500

7839105800 1009409000
$16696380000

Total

assets

at

value

$21

866774400

$96400

$9852523500

Usbifitles Securities sold not

yet

purchased and

U.S

government agency

securities

federal

debentures mortgage-

$3297000700

74274500

3371275.200

U.S

government
securities

backed Corporate EquitIes

961314900 255800300 226845900 38541200 23821700

not yet

981314900 255.809300 226645900 38541200 23821700

debt

securities

Equityoptiona Options on Total securities purchased

futures

add

3586209500

1291398700

4877606200

Securities agreements

Sold under
to

rec3wthase

13321739100 $3566209500

9882526500

3439212.600

Telal

liabtttlea

at

far value

$14813137800

988252B500
In

$8311820800

Represents Excludes

the tnpect
resale arid

of

netting

certain

resale

and

repurchase
at

agreements value

accordance

with

ASC 210-20

repurchase purchased

agreements under

that

are held

contract

Represents
affiliates

securitIes

agreements

to resell

with

affliates

held

at

falr

value

Excludes

agreements

with

held

at

contract

veua
with cost of

DurIng

the year

4000

sharei

$488000

were

transferred

from

acchange

memberships

to

securities

owned

The

falrvalueof

thesesharee

was $1206000at

March

312011

14

MF

Global

Inc
of Financial

Notes

to Statement

Condition

March

31

2011

The

table

below

provides

reconciliation

of the beginning
at fair

and

ending

balances

for

the

major Level

classes

of assets

and

liabilities

measured

value

using

significant

unobservable

inputs

Fair

Value

Measurements

Using

Significant

Unobservable

Inputs

Level

Balance
Total

as of

April

12010
unrealized gains

293600 losses
net

realized

and

1800

Purchases
Transfers

and
In

sales net
of Level

out

BatanceasofMarch3l2011

____________
the

For the year or Level

ended
In

March
fair

31 2011
hierarchy

Company

did not

have

transfers

in

or out of Level

Level

the

value

The Company
interest

rates

may use derivative The Company also

are

contracts transects

for in

purposes
derivative

of mitigating contracts

its

exposure
proprietary

to

fluctuation

in

on

basis The

derivative

contracts

marked

to

market based upon

quoted

market prices

The
on

following gross

table

summarizes

the

fair

value

of the

Companys

derivative

contracts

by major type

basis

as of March

31 2011
Derivative Assets Derivative

Number
Contiacts

of

Uabltles

Derivative

contrts
options

tortrsdbig

activities

Equity

54553200 28097200
contracts
for trading

38541200 23821700 62362900

655472 21781 077253

Cycpions
Teed
fair

yatie of derivethe

sctlvWee

82650400 condJon
of financial

Recorded

In

Securfiles

onmd
sold

on

the statamet

of financial

ReCOrded

In

Securities

nat yet purchased

on the statement

condition

As

of

March

31 2011

the

Companys volume
gain or
loss
is

of

exchange
daily

traded

futures

executed

and

or

cleared associated

where the unrealized

with the contract clearing

settled

and
are

there
primarily

no receivable
cleared

or payable

was 21428

These

contracts

through

commodity

corporations

Derivative

financial in

Instruments or
volatility

Involve of or

varying rates

degrees
foreign

of off-balance

sheet or

market risk whereby market values which

of the

changes
underlying the

the

level

interest

exchange
In

rates

financial

instruments

commodities may
of
financial

result

cash settlements The Company

that

may exceed
in in

amounts
to

recognized

on the statement

condition

place doing

mitigate

market risk although

there

can

be no assurance

they

will

has procedures in fact succeed

so
Plans

10

Benefit

During

the

year

eligible

employees

of the

Company
to

were covered

by Holdings to
certain

401k

plan

The
set

Company
forth
in

matches

employees

contributions

the

401k

plan subject

limitations

the

401k

plans agreement

15

MF

Global

Inc
of Financial

Notes to Statement

Condition

March 31 2011

11

Affiliate

Transactions

MFGH
captive

Ltd provides
insurance

non-property

insurance

coverage

to to

the the

company

Premiums

are allocated

Company underwritten by an Company based on actuarial

affiliated

calculations

MFGH
the

Ltd charges the Company fee use of the MF Global trade name

for

the services

of executive

management and

royalty

for

Holdings not
limited

provides

certain

administrative

services

to

the

Company

These

services

include

but are
for

to

payroll In

and

human

resources

processing

The Company
incur various

reimburses Holdings

these

services

addition
to

MFGH

Ltd and Holdings

costs including

Insurance

which are allocated

and

reimbursed

by the Company

The

Company earns
for

portion

of

its

commission

revenue
Is

by executing

and

clearing
affiliates

brokerage
for

transactions transactions

various

affiliates

The Company by those

also

charged

by various

executed

and cleared

affiliates

on behalf of the Company

MFG
margin

Finance

provides

financing
of

loans

to

certain the

customers

of the
of

Company

primarily

for

meeting by

variations

As

March

31 2011

total

amount

outstanding

financing

provided

MFG

Finance

is

$52090100
with
to

The Company customers

contracts
to

has an agreement

MF

Global or

UK
sell

Limited

MFG UK
Metals

an

affiliate

to introduce

MFG UK who

desire

purchase

London

Forsuth

contracts

the counterparties

arecustomers of
share

MF

Exchange UKwlth

futures

and

options of
in

noobflgatlon

performance
the

by the Company
from such

The Company

receives

of the

Net

Profits

as defined

agreement

transactions

The

Company

entered

into

repurchase

agreements
identified

with

an

affiliate

that are

coilateratized

with the default

European
collateral liquidity

Sovereign associated

debt

The

affiliate

the

market opportunity
the

and

manages
affiliate

with these services

transactions the

although paid

Company

retains the issuer fee

to

and

risk

For these

Company
agreements

management

the

The

management
from entering

fee represents
into

approximately

80%

of the trade date

gain recognized

by the

Company

these

repurchase

Certain condition the

balances

included

in

receivable net
in

from

and payable
with
to

to

affiliates

on the statement
Is

of

financial

have

been

recorded

accordance and

ASC 210-20
affiliates

The following

schedule

of

components

of the receivable

from

payable

Receivables
Securities Futures

net

Payables

net

purchased

under

agreements

to

resell

4190677400

25455600
1535606500

transactions loaned transactions

indirect

1200
5088700
expenses

Securities Securities Direct

22183200
39651600
allocated

and

169500 4195914400

2151600
1525467700

12

Net Capital

Requirement

The Company
broker-dealer
capital

Is

subject
is

to

the

SECs

Uniform

Net Capital Rule commission

under

rRule

15c3-fl
to

which requires
adjusted net or

that
to

also registered the greater

as
of

futures
its

merchant
paragraph

maintain

equal

or

above

requirement

a1li of

Rule 15c3-1

16

MF

Global

Inc
of Financial

Notes March

to Statement

Condition

31

2011

the aggregate

of

8% of

customer

maintenance
At

margin

requirements

and

8% of

non-customer defined of
to

maintenance

margin requirements

March
in

31 2011 MFGI had

net capital
capital

as

$562882400
maintained

which was $125710300

excess of the minimum

reqUired

be

The Company

Is

subject regarding

to

certain

notification to

and

other

provisions

of the net

capItal

rules of the dividend with

CFTC
all

and

SEC
and

advances

affiliates

repayments

0f subordinated the

liabilities
in

payments
of
Its

other

equity withdrawals

At March

31 2011

Company was

compliance

applicable

requirements

13

SubordInated

Borrowing
the balance includes of subordinated notes

At March

31 2011

total

due to Holdings

and

MF

Global

Finance

USA

Inc

MFG

Finance

Lender

Amount 130000000 50000000 37500000O

565.000000

Maturity

Holdings

1-3 years

MFG MFG

Finance Finance

Lessthanlyear
1-3 years

The

subordinated

notes

carry

Interest

at rates balance

agreed

to

between the lender and the Company

rate

from

time to time
effective

based

upon

the unpaid note

at the at

30-day LIBOR

plus

500 upon

basIs points

The

interest

rate

on each and

was 5.26%
the

March

31 2011
net capital

Based

agreements
the
to

approved
subordinated maturity

by

the

CME
is

CBOE
In effect

Cornpanys

designated

self-regulatory organizations This debt

debt
if

available giving

computing
to

regulatory the

may be repaId pnor

regulatory net
capital

only

after

such payment

Company

meets

its

requirements

During

the

year-ended March
notes

31 2011
in

the

subordInated

as reflected

the schedule

Company extended above

Risk and

the maturity

of certain

14

FInancial

Instruments

with

Off-Balance Sheet

Concentrations

of Credit

Risk

The Company
Including

is

exposed
or

to

wide vanety

of

risks which

are Inherent

In

Its

business

and

activities in

volumes
pressure

In

margin pressure that could be brought about by general decline the markets and products in which offers execution and clearing servIces volume
it

margin

due

to

market conditions
competitors
in interest

diminishing applying

client

franchise
In

due

to

either

disintermediation

by exchange

or other

Innovations

technology

macro-economIc

changes

such as movements commodity any of these

prices
risks

rates
in

currency

and
could

changes
affect

issuer default or exchange rates security instrument and market correlations Long-term exposure
financial

to

not only

performance

but also the

Companys

reputation

The Company
investments proprietary
activities

Is

exposed

to

market risk due

for
its

to

the inventory

of securities positions
facilitation In
Its

and
activities

the

Company
and
is

holds

market

making

and

client

principal

actMties the

other investments

and treasury
trading

operations

day

to

day business
with
In

Company
which

engaged

in

various

brokerage

and

investing
financial

activities

counterparties event

primarily

include
their

broker-dealers obligations the

banks and other

institutions to risk

the

counterparties

do not

fulfill

Company
and

may be exposed
concentration

of default

The Company

manages

these

exposures by

limiting

the size

of positions

17

MF

Global

Inc
of Financial

Notes to Statement

Condition

March

31

2011

Market

Risk

in Interest The Companys market risks include exposure to movements rates currency credit issuer risk including changing rates security and commodity prices yield curves

exchange spreads
volathltles

changes

in

ratings

and the

possibility

of issuer

defaults

mortgage

spreads and

implied

Interest financial

rate

risk

arises

from the the

possibility

that

changes

In

interest
is

rates

will affect

the value rate

risk

of

instruments debt

that

Company

holds

The Company

exposed

to

interest

on the

subordinated
in

that

the

Company owes

client

cash and margin

balances

and

positions

carried

fixed

exposed

Income securities equity securities options and futures rate risk in its own proprietary and principal to Interest Changes
in interest Interest

The Company
activities

may

also

be

as well as
interest

asury
Income

operations
relative

rates

can adversely

change

the

Companys

to the

Companys
arises from

expenses

Currency
value of

risk

the

possibility

that

fluctuations of the

In

foreign

exchange
located

rates

will

impact the

financial Is

instruments

and the value

foreign

Companys
Its

assets

outside
principal

of the

U.S
and meet

The Company
also

exposed

to

exchange
part of

rates from
Its

proprietary
liabilities

and

activities to

because

the

Company must keep

obligations

assets

and

in

foreign

currencies

operational

and

regulatory

Equity value

price

risk

arises

from the

possibility

that equity security

that

prices value

will

fluctuate

affecting

the

of equity

securities

and
or

other Instriments stock Index

derive

their Is

from
equity

particular

stock
primarily
in

defined

basket of stocks

The Company purchased

subject
Is

to

price

risk

securities
client

owned and
or

securities

sold

not yet

which

faciNtatlon
its

market making
across

activities different

The Company
options futures

attempts

consequence to limit such

of proprietary
risks

by and

diversifying

portfolio

many

and

underlying securIty

securities

avoiding

concentrations

of positions

based on the same underlying

Commodity
value

price

risk

arises from
directly

the

possibility linked

that

commodity

prices

will

fluctuate

affecting

the

of instruments
Is

or
to

indirectly

to the price of the underlying through price

its

commodity
the metals

The
arid

Company
markets
proprietary

directly

exposed

commodity
to

prices

transactions also

in

energy
of

The Companys exposure

client facilitation

commodity

risk

may

be the consequence

or

market making

activities

Issuer

default
collateral

risk

arises

when an

issuer of the impaired

collateral

defaults loss For

on

its

obligations the

This could enters

cause
Into

to

be permanently

causing

example

Company

and are repurchase transactions which mature on the same date as the underlying collateral in accordance with the accounting standard for transfers accounted for as sales and purchases the collateral and servicing In these transactions the Company would be required to repurchase
at the contracted the value of the repurchase
coliateral for price loss

upon and

the expiration

of

the

agreement
for

it

there

is

impairment

In

may be recognized
purchases

Mdltionally

resale

and

repurchase repurchase or

transactions forward

accounted

as sales
in

the

Company

records
for

forward

resale

commitment
for

accordance

with the accounting

standard
is

transfers
to

and
to

servicing

which

is

accounted

as

derivative
volatility
will

The value
in

of the derivative
financial
is

subject

mark

market
of the

movements which may cause

underlying underlying
collateral

the

Companys

results

until

maturity

and which

not

be realized

unless there

default

of the issuer of the

securities

Also under our repurchase sales our counterpartles

securing our
ability to

agreements

including
to

those

repurchase margin during

liquidity

agreements
at

accounted

for

as

may

require

us

post

additional collateral

any time as

means for
the value of

repurchase

the underlying

the term
risk for

of the repurchase
if

agreement

Accordingly

repurchase

agreements

create

us because

18

MF

Global

Inc
of Financial Condition

Notes March

to Statement

31

2011

the

collateral

underlying

the repurchase there are

to

agreement

decreases

whether
to

because

of

market
the

conditions

or
will

because

Issuer-specific additlonl

concerns

with respect

the coIIatera

Company
the value defaults

be required
collateral

post

margin which the Company

Impaired

may
the

not

ediIy
of the

hav
collateral

of the

became
the
price

permanently

for example
to

If

the issuer

on

Its

obligations

Company would be
the expiration

required

repurchase

collateral

at the

contracted-for recognize

purchase
loss

upon

of the repurchase

agreement

causing

us to

Credit

Risk

Credit client broker from

risk

is

the

potential

for

loss related

to

the default Credit

risk

or deterioration derives from

of the

credit

quality

of

counterparty

or issuer

of securities

assets

placed

with

banks
risk

dealers clearing

organizations

and

other

financial

institutions

Mdltlonaily

credit

arises

repurchase and resale transactions other brokers and dealers The Company
execution

securities

borrowed

and

loaned and
principal
it

receivables
In

from

acts

as both

an agent and which exposes

providing

and

clearing

services

for

listed

transactions

to credit rlsk

The
the

Company Company

is

exposed
their

to

losses

when
Is

clients

are not able or to

satisfy

willing deficit

to

meet

their

obligations

to

and

posted

margin

insufficient

the

The Companys
the poesIlfty

default

risks

Include both counterparty

pre-settlement default

and settlement
the

risk

Pre-settlement could Incur the

to

risk

is

that should the

resulting risk

on

its

obligations

Company

loss

when

it

covers

open
is

position
possibility

because the market price has moved against

that the
In

Company
counterparty
netting

Settlement

the

Company Many

may pay
of these

or release

assets

and

fail

to receive

the settlement

exposures are subject to

agreements
are

exposures approval

based

which reduce the net exposure to the Company Limits for counterparty on the creditworthiness of the counterparty and are subject to formal

lines

of

For execution-only
clients

clients

the

to to

pay commissions accept the

dif

Companys The Company

principal
is

credit

risk to

arises the

from
that

the

potential

failure

of

also

exposed
the

risk

clearing

broker

may
and

refuse the

enfs trade

which would

require
that

Company
on
to the

to

assume bals

the positions the

principal

resulting risk

market risk
from the

For cleared

customers

transact margin
initial

margin

credit

arises

Company

paying

variation

exchanges
variation

before

receMng

it

from

customers
to

Most customers are required to cover pay any margin

deficits

and

margin

with

cash and

are required

withIn

24

hours

The Company
paid
to

mitigates

the

risk

on

its

cleared they

margin business

by customers as
Initial

deposit

before

can commence
Daily
affecting

trading
if

by requiring the Initial margin to be Most customers are required

intra-day margin
calls

cover

and
to

variation reflect to

margins

with

cash

and

required positions
in

are

made on
reserves

clients

market movements any customer

clIent

The Company
of

generally
to

the

right

liquidate

position

immediately

the event

failure

meet

margin call

The Company
counteipartles recognized

is

also

exposed

to

the

risk

of default

by counterparties and

with respect highly rated

to

positions

with

These

are mainly

exchanges

clearing-houses

and

internationally

banks

In

most markets the Company

acts

as an Intermediary

resulting

In

limited

market

risk

to the

Company
where
position the

The

exceptions

are intra-day positions

In fixed

income

metals

and energy markets

closing

and there may be time delays between opening and Company acts as principal The Company may also maintain small positions overnight in these markets

19

MF

Global

inc
of Financial

Notes to Statement

Condition

March

31

2011

In

line

with

market practices
initial

an

affiliate

of the

Company

also provides

unsecured

credit

lines

to

some customers 1r
with
its

and

variation is

trading

andother

activities that

The Companys exposure to credit risk associated also measured on an individual counterparty basis as well as margin
similar

by groups of counterpartles
affected

share

attributes

Concentrations

of

credit

risk

can

be

by changes

In

political

industry

or

economic factors

In

the

normal course of business the Companys customer and

financing of various the
Its

activities

include that are

In

the

execution
or

settlement

customer

securities

transactions shet
risk

loaned

borrowed
or
sell

These
other the

activities

may expose
unable
to

Company
contracted

to off-balance obligations
at

the

event the customer has

to

broker

Is

fulfill

and the Company The

risk of

purchase on

or

financial

Instrument

underlying

the contract or issuer

loss

default

depends

the

creditworthiness

of the counterparty

of the Instrument

The Cmpany
adjustments
for

controls ci
cotiateral

this

risk

by monitoring
in

the

market value

of securities

pledged

by requiring
limits

levels

the event

of

excess

market exposure

and

by establishing

such

activities

In

addition
to

the

Company
financial
if

has sold

securities

that

It

obligated obligations

purchase
in

such

securities

at
at

future

date

does not currently own and will therefore The Company has recorded these
at

be

the

statements
fair

March

31 2011

the

fair

values

of the related
to

securities

and

will

incur

loss

the

value

of the

securities

Increases

subsequent

March

31 2011

Operational

Risk

Operational inadequate

risk

Is

defined
internal

as the

risk

of loss or other

adverse

consequence

arising

from

or

failed

processes people exposed to

broad

and

systems or from external

types of
risks

events which

The
could

Companys
significant

operations

are

number of these

have

impact on the Companys business

15

Stok-Based

Compensation

Certain

of the

LTIP
costs and
other

In MFGH Ltds 207 Companys employees participate Long-term Incentive Plan The Company records Its allocated share of MFGH Ltd.s stock-based compensation

The

LTIP provids
rights
to

for

equity

compensation
restricted

awards
units

In

the

form of stock

options

stock

appreciation

restricted eligible

stock

stock

awards
the

employees

consultants

cash-based awards performance awards directors and other lndMduals who provide
Ltd.s
for

services

to

Board of

by the MFGH Company each as determined Directors As of March 312011 the LTIP provides

Compensation
of

Committee up
to

of the

the Issuance

24.3

million

shares to be issued

MFGH

Ltd Issued

restricted

stock

units

and stock

options

to

certain

of the

Companys
over

eligible

under the LTIP stock employees Generally options vest in equal vested awards can be exercised subject to continued employment
date of grant Stock options

installments
within

years and seven years from the

three stock at
In

have an exercise
stock
to units

price

equal
at

to

the price
to

per

share of common

the date
full

of grant three

Restricted subject

are issued

no cost

the

employee

and vest ratably or

eligibility

after

years

continued

employment

or meeting

certain

retirement

criteria

The

fair

value

of

each

share option
to the lack of

Is

estimated

at

the date
for that

of grant using Ltd.s

Black-Scholes

option
its

valuation

model Due
volatility

historical

data

MFGH
took
capital

own stock MFGH Ltd based

the following
criteria

expected
Industry

on

representative

peer of
life

group
cycle

Into

account

market capitalization stage

and

structure

The

risk-free

rate

is

20

MF Globa Inc
Notes to Statement
of Financial

Condition

March

31

2011

determined

using the

implied

yield

currently

available

on zero coupon

U.S government
Ltd
the

bonds with

aermconsistentwtththeexpee4
not expect
yield is

teimonhe.datef.grant

MFGH
options

hasnotpaIandes
assumed
to

to

pay dividends
During

on

its

common
March

stock

in

the future

accordingly

dividend
of

zero

the year

ended

31 2011 no

were granted

employees

the

Company
The
stock option for the year

activity

ended

March

31 2011

is

as follows

wel_
WeightedAverage Average Remaining
Contractual

rctes
Price

Aggregate
Intrkialc

per
22.13

Term

In

Number
Stock options outstalu8ng
net

stock

y.ers

Value

as

of

AptI

2010

1893886

Tiansfers

5292
cancelled as
to of

Eerclsed
lcxfefted

and

13523 404006
March
of

2.96 26.43 21.00 21.18 24.05 4.0 3.9 3.7

Stock Stock

Wtlone options options

aitstendkig

31

2011

1270845
2011

480119
432.712

mpected

veal
at

as

March

31

1253844 1.005636

e..rclsable

March

312011

140083

The

restricted

stock

units

activity

fbi

the year

ended

March

31 2011

Is

as follows

Restricted

Stock Unit

Weighted-Average
Grant Aieards Value

Ost
per

Feir

esard
22.74

Nonmetui
Trwisfere

as

of

April

12010

1770102 244

net

ed
c3ranted
Forfeited

4578645 1584365 115801 ___________________

7.95 24.59 7.68 7.89

Nonvested
Total

as

of

March

312011 aspen.
to

4649l5
ramming
aver

unrecognized

ccmpensaUon

26168335

Weighted-average

ewi

eoecled

be

recognized

225

MFGH
through

Ltd has an Employee

to

Stock Purchase

Plan

ESPP
discount

to

provide
to

employees
for

with an

opportunity

purchase

shares from

MFGH

Ltd at

and

pay

these

purchases

payroll

deductions can

Participants

can withhold

1-15% of

their

eligible

compensation

however value

no participant
of

purchase

morn than
shares

500 shares

or shares

exceeding plan

$8000

in

market

As

March

31 2011 118359
Contingencies

were awarded

from

thIs

16

Commitments
The

and

Company
legal

Is

currently

and

in

the

future

may be named as

defendant

in

or

made

party to

various pending of these

actions

and

regulatory

are described matters

below
legal

involving of

proceedings Some of these matters that are currently Claims for significant monetary damages are often asserted in many number of these actions seek an unspecified or actions although
including punitive damages while claIms for disgorgement in may be sought by governmental or other authorities
difficult facts to

indeterminate penalties regulatory given

their

amount

damages

and

other remedial

sanction

proceedings It Is inherently and the particular complexity

predict

the eventual
at

outcomes
issue
in

of these of

matters

and circumstances

each

them

21

MF

Global

Inc
Condition

Notes to Statement of Financial

March 31 2011

in

view of the inherent

the

unpredictability

of

outcomes

in

legal

and regulatory

matters

particularly

where

damages
the

sought

are unspecified

or Indeterminate questiohs of

the proceedings

are

In

the

early stages

or

mars
is

invoke uneetiled

mupIe

pwffes

Othpcta
resolution

and

circumstances

there

considerable

uncertainty

surrounding

the timing

or ultimate

of these

associated matters including possible eventual loss fine penalty or business impact matter In accordance with applicable accounting with each the Company accrues guidance believes they present loss contingencies that are amounts for legal and regulatory matters where
it

both
to

probable
In

and

reasonably of

estimable

In

such cases and

however
to

the

Company
Moreover

may be exposed
from
In

losses
reflect

excess

any amounts
that

accrued
affect
if Its

may need
of

adjust

the accruals

time to time

to

developments
accounting
is

could

estimate

potential

losses

accordance
loss

with applicable
particular

guidance
probable

the

Company
would

does not believe that the

It

potential

from
will

matter

both
for

and

reasonably
that

estimable

does not make an accrual

both

and

monitor

the matter

reasonably

any developments estimable The actual results

than

make

the loss contingency matters

probable

and

of resolvIng

these

may
if

Involve losses

that are

substantially higher

amounts

accrued

and

Insurance

coverage

any
related to the

Set

forth

below

are the

potentially

material

Ittigatlons

and regulatory

proceedings

Company
Unauthorized Trading
Incklent of

February 26/27

2008

One

of the

Companys
branch

brokers through

Evan one

Dooley
of the

trading

for his front

own
end

account order

out of entry

Memphis

Tennessee

office

Companys

Express put on and

early

significant

wheat futures position

during the

late

evening

systems Order of February 26 2008

morning of February 272008 The positions were liquidated at loss of $141045000 on February 272008 The trades were unauthorized and because the broker had no apparent

means
required

of paying to

regulators

for the trades the Company as clearing member of the exchange was pay the $141045000 shortfall the Dooley Trading Incident The exchange and were Immediately notified the broker was promptly terminated and public

announcement
Trading Incident

of the loss

was made by the Company

the next

day

As

result

of the

Dooley

Insurance

Claim The

Company
for

flied

claim

under

its

Fidelity

Bond

Insurance

the

Bond

which
for this this

provides toss

coverage

wrongful

or fraudulent

After

months of investigation
certain definitions

claim

based on

and
in

indemnification employees seeking the Companys Bond insurers denied payment of exclusions to coverage in the Bond They have also

acts of

Initiated

an action against the Company

seeking declaration believes
Its

the

York

County

that there
to

Is

New Court of the State of New York Supreme no coverage for this loss under the Bond The
In

Company
to enforce

the insurers
to

position

be

error

and

flied

counterclaim
partial

in

order

to

seek

which

The Bond payment In court The Bond insurers have the Court denied
right First

Insurers
tiled to

sought of

summary Judgment
to

Notice or

Appeal

the Appellate

Division

Department

and

also

filed

motion

Renew
that

Reargue

with the

Supreme

Court challenging

the portion motion

that to

of the decision

that found

Company
Notice of

Insurers

Renew
as well

or

Reargue

has been

Dooley was an employee of the denied and they have flied

Appeal

on

issue

Benk

of Montreal

BMO
suit

On August

as

well

as

28 2009 BMO Instituted firm named Optionable

States
District

against

the

Company and

its

former

broker or

Joseph

Saab
In

the United asserts

Court

for

and five of Its vOptionable the Southern District of New York

Inc allegations that Optionablo

principals In
its

employees

complaint

various

claims

based upon on
natural

and the Company

SMO BMO provided

with price

indications but the

Independent

indications

gas option contracts that BMO allegedly believed were had been provided David Lee and were passed trader by BMOs

22

MF

Global

Inc
of Financial Condition

Notes to Statement March 31 2011

on

to

BMO

thereby

enabling

Lee

substantially

to overvalue aided

BMOs

uthoraUeges flduliydtisby
other

Company and sed1hg1ce The Complaint

Saab

lridlcalith

BMO
all

and

abetted

natural gas options book Lees fraud and breach of his

additional

BMO

There are

selaiiigansf
liable that the

defendants
the from

seeks

to

hold

defendants

jointly

and severally
claims

Although
resulting

Corn plaint

does not specify

trading

an exact

damage
excess
of

claim

BMO

cash loss had

Lees fraudulent

BMO received
that
it

1co
have

activity
Is

which allegedly
in

could

have

been
In

prevented

pricing

Information

$500000000

addition

BMO claims

would

not

paid brokerage
his

commissions
as

have would

continued not

Lee and
Incurred

supeMsor
for

have

substantial but
to

legal

to the Company and Optlonable would not and employees at substantial salaries and bonuses of its costs and expenses to deal with the overvaluatlon

natural

gas

options

book
motion

defendants alleged
the complaint

Company

made

dismiss

conduct All defendants Including which was denied by the court

the

Ama cksr

Renaissance

Asset Management Fund eL al

merchants In December 2007 the Company with four other futures commission along defendant in an action filed In the United States District Court In Corpus Christi was named as Texas by 47 individuals who were Investors In commodity pool RAM LLC operated by Renaissance
defendants

FCMs

Asset Management
violated of
to

LLC

The complaint

alleges

that the

Company

and the other law

fraud

violation failing

Act and alleges claims of negligence common Commodity Exchange Texas statute relating to securities fraud and breach of fiduciary dutyfor
the diligence trades

allegedly advisor

conduct due

on the commodity
directed
to

pool operator

and

commodity
advisor

trading

having
In

accepted fraudulent

executed

by the commodity commodity

plaintiffs

trading

which was
the plus

engaged improper

scheme
all

with respect

the

pool and

having of
to

permitted

allocation

of trades

among accounts
defendants
All

The
of the

exemplary damages from

complaint
for failure to

daim damages FCM defendants moved

$32000000
dismiss the
Initial

state

daim upon
plaintiffs

which
to

relief
file

conference
plaintiffs

the court granted

leave which

may be granted Following an an amended complaint On May

abandoned
all

pre-tilat

2008
claim

filed

an amended

cornplaintfn aided
in

plaintiffs

claims

except

alleging
Plaintiffs

that the

FCM

defendants

and abetted

now seek $17000000

flied

claimed the

Act Exchange damages plus exemplary damages from all defendants

violations

of the

Commodity

The Company
and appealed

motion

to

dismiss

amended

complaint

whidi was granted

by the court

by the pialntlff

Sentinel

Bankruptcy

The

CTrustee for Sentinel Management Group Inc aSentlnel sued the on the theory that the Companys withdrawal of $50200000 wIthin 90 Company of Sentinels on August 17 2007 isa voidable preference bankruptcy petition days of the filing 547 of the Bankruptcy Code and therefore recoverable under Section by the Trustee along with
Liquidation
In

Trustee

June 2009

interest

and
to

costs
the

The

Company
recovered

believes

there

are meritorious those funds

defenses

available

to

it

and

it

Intends

resist

Trustees attempt amount against

to recover

the extent
offsetting

the Trustee claim

in

any funds

from the Company In addition from the Company would be able to assert an
it

to

that

the assets

available

in

Sentinels

bankruptcy

case

Agape World
In

May 2009
others

investors
in

in

venture States

set

up by Nicholas
Court
for

Cosmo sued Bank

the Eastern Disbict of

of

America York

and
in

MFGI

among
separate

the United

District

New

two

class actions and one case brought by certain individuals alleging that the Company Ponzi scheme in which investors among others aided and abetted Cosrno and related entitles In lost $400000000 The Company made motions to dismiss all of these cases WhICh were granted The time when plaintiffs are able to appeal the dismissal will not begin to run until with prejudice the action against the remaining defendants
is

decided

23

MF

Global

Inc
of Financial Condition

Notes to Statement March 31 2011

Pliiciippdes Capital

ManagementiMaik

Tilmble

In

the

late

spring

of

2009
and

the

Company was sued

Mark
Trimbie and/or
in

in

Oklahoma
Phidippides

SlateCourt by customerswho
Capital

were substantial
allege aided
that

Investors

with

Management Company
provisions

Plaintiffs

Trimble

Phidippides

engaged

Ponzl

schema
of the
In

and

that the

materially

and

abetted Tumbles and Phidippides laws They

are seeking

violations

anti-fraud

of the

Okiahomaseourities

damages

the

amount

of

$20000000

The

motion Company made The Court of CMI Appeals

to dismiss
for

which was granted Plaintiffs have appealed by the court the State of Oklahoma the Companys dismissal Plaintiffs upheld
with the

have

flied

petition

for

certiorari

Supreme

Court of

Oklahoma

Morgan

Fuel/B

of tin Brothers

The Company

and

MF
the

Global

Market Services

LLC Market Services

were Involved

in litigation

with the pnnclpala

Co Inc
Bottini

Fuel Market Services Heating BothnW of former customer Morgan Morgan Fuel The litigation arose out of trading losses Incurred by Morgan Fuel in derivative

aver-the-counter principals
to

swap
Services

transactions

which were unconditionally

against debt the
to

guaranteed
Bottinis

by the
the

Market

FINRA
Morgan
breach

recover
after

$8300000
the
liquidation

commenced an arbitration which was the amount of the

of the

before Services

owed

Market

by
of

Fuel

swap

transactions

Market Services and

asserted

claim

failure to honor the personal based upon the Bottinis Fuel guarantees they had issued for the obligations of Morgan

of contract

unconditional

Fuel commenced arbitration before F1NRA against the Company separate proceeding Morgan and Market Services seeking $14200000 In trading losses Morgan Fuel sought recovery of dedaration that $5900000 in margin payments that It allegedly made to Market Services and

it

had

no

responsibilIty

to

pay Market Services

injunction in

for

the remaining courts

to

$8300000
resolved
all

in

trading

losses

The on the

Company
ground
against

obtained

an

the
to

New York
arbitrate

permanently

stay

this arbitration

that there

was no agreement
through

The

parties

claims
off

they may have

each

other

owed
In

to

Market

Services

and write cash payment to Market Services There was no financial to the Company bTpact Commodities

of part of the debt

re Platinum

and 2010

Palladium

Litigation

On August
complaint Court
for

the

filed

against

the

Southern

defendant consolidated class to Company was added as Management and related entitles In the United Capital of New York which alleged claims of manipulation and District

action States aiding

District

Moore

and

abetting alleged

manipulation that

In

violation

of the

Commodities and June

between

October

25 2007

Aut Specifically the complaint Exchange 2008 Moore Capital directed the Company
for

as

its

executing

broker to enter large

palladium the futures

platinum

and

market on close orders at or near the time of the close which allegedly caused artificially Inflated On prices contracts as
defendant class of
to

August
against

10 2010

Company was added

entitles in

related

class traded

action

complaint

flied

the Moore-related

on behalf of
time

plaintiffs

who

the physical

platinum

and

palladium

commodities
violations

the relevant
civil

frame which
Influenced

alleges

price

fixing

under the Act

Sherman September
all

Act and

of the
tiled

Racketeer

and

Corrupt

Organizations

On

30 2010
of platinum

plaintiffs

an amended above
physical

consolidated on behalf
of

class

action complaint of traders motion

that includes of futures

to

of the allegations

and and

claims

identified

subclasses palladium not

contracts heard

palladium

and

platinum

and

dismiss

was

on February

2011 Race Wer 2010

the

PlaIntiffs

claimed

damages have

been

quantilled

Marion Hecht

as

for Joseph

Forte

L.P

On December21
complaint

Marion

Hecht
In

as Receiver

for

Joseph
District

Forte Court

L.P the Partnership

for

filed

against

Company

the United

States

the Eastern

District

of

24

MF

Global

Inc. of Financial

Notes to Statement

Cond Won

March 31 2011

Pennsylvania Partnership

that alleges

one

claim of negligence
with

Specifically the complaint

alleges
its

that

the

had

trading

account

the

Company

and that the Company

Act

violated recognize

duties the or take

to

imposed

by state lawand

under the Commodity

registered
to false financial

Exchange

by

falling

to

that

Partnership reasonable provide

was

not properly
in

with the claimed

CFTC

or the National
falling to

Futures require

Association the Partnership or take

to

action

response when
to

exemption
falling to

financial

reports

or other

records
in

make

sufficient

Inquiries

action

regarding reasonably that the

the

registration

discrepancies action

Partnership

documents
in

existed Partnership

tailing

recognize

or

take

upon

the unusual
to

activity

the Ponzl

account

and

Companys conduct
Investors

enabled

the Partnership claims the

operate

scheme and cause

In

damage to the $10000000

in

The Receiver

Company caused

losses

excess

of

r6 Agape World

inc

Bankruptcy

On Janualy 28 2011 Kenneth

substantively complaint consolidated against the

Silverman

as

Chapter
of various States

Trustee

of

Agape World Inc

collectively

bankruptcy
In

estate

Agape

entitles

Agape
of

filed

Company

the United

Bankruptcy

Court Eastern

District

New

York seeking to recover the transfers made by Agape to the Company $27100000 plus totaling with the trades any fees earned In connection Specifically the Trustee alleges that the transfers and the fees received because the by the Company are recoverable as fraudulent conveyances

Company
that the

allegedly

received
failed to

these conduct

funds

not

In

good

faith

The

basis

for

the alleged

bad

faith to

Is

Company
provide

sufficient

diligence

when

opening

the

account have

failed

respond
failed to

to red flags

about how account

oversight

principal

Nicholas

Cosmo was
If

using

Agapes

funds

and

proper

and

monitoring

which

conducted

would

caused

termination

of the

accounts

and trading

and prevented

losses

to the investors

German ntmduclng-oker
In

Litigation

recent

years two

of MFGI-I
In

Ltd.s

subsidiaries lawsuits

the
tiled

subsidiaries
in

one

of

which

is

MFGI

have

been had

named as
accounts had

defendants

numerous

German

federal allege

courts that

by

plaintiffs

who
and

Introduced contractual

by German Introducing
relationships
for

brokers

Plaintiffs

the introducing equity options

brokers other

with the

two subsidiaries
the subsidiaries the introducing

and and

executed

derivatives
for

transactions alleged

them through
acts of both losses

that the subsidiaries

should

be

liable

certain
to

twtious

brokers

and

the subsidiaries

Plaintiffs

seek

recover not

investment

statutory interest attorneys through claimant

significant In

faes

and costs
firms since

The

subsidiaries

have

conducted

retail

business

German
is

Introducing

2006
number
Court
in for

None
claims

of the

have

damages claimed by any individual been seWed or adjudicated without

has Increased
plaintiffs in in

material

and to date

many

of the

Impact to
In

MFGI
the

however

the

of these ruled
in

lawsuits favor of

the past

year

addition

2010
and

German Supreme
that time the trend brokers
liable

similar

case against

another

firm

since

cases
alleged

involving
tortlous

the subsidiaries

has increasingly
Introducing

been

to find

foreign

clearing

the

conduct of

local

brokers

Other

In

addition

to

the

matters

discussed arise
in

above

from time

to

timethe
of
is its

Company

Is

party

to

litigation

and

regulatory discussed
litigation

proceedings

that

the ordinary

course
that
It

business Aside from those any pending aggregate would

matters

above
have

the

Company
proceedings material

does not believe

that
individually effect

party to the

or threatened
in

or regulatory

or

in

the opinion

of

rrianagement
financial

adverse

on the Companys business

to

results

of operations

condition
in

or

cash

flows.ln

addition

the matters

described

Is

and

the future

may be named
matters
that

as
arise

defendant
in

or otherwise course

above made party

the
to

Company
various

currently

legal

actions from

and

regulatory

the ordinary

of the

Companys business

Aside

the matters

described

above

the

Company does

not believe

on the basis of managements

25

MF

Global

Inc
of Financial

Notes to Statement

Condition

March 31 2011

current

knowledge
matters

and
that

assessments
either

that

it

is

party the

regulatory

indMdually

or

in

or threatened to any pending aggregate after gMng effect

legal to

or

applicable

consolidated

financial

condition

operating

results

or

cash flows have been

At March
for

31 2011 customers

letters

of

credit

amounting

to

$447075000

deposited

margin requirements

with clearing

organizations

The Company
collateralized

guarantees basis

certain

third-party

loans

to

lenders

on behalf of professional
to

traders

on
of

Guarantees
of

at

March

31 2011

amount
is

$3734700

and the market value

the

collateral

consisting

exchange

memberships

$13045200

17

Subsequent

Events

In

accordance
occurred

with

ASC

855-10

the

Company has
the date
Its

evaluated report

the events
In

and
April

transactions

that

have

through

May 26 2011 $30000000

this

was Issued

2011

the with

Company

borrowed Finance

an additional

from

revolving

subordinated

loan

agreement

MPG

26