The AlphaMetrix Group LLC, the middleman which connects hedge fund managers and futures traders, recently intimated it was experiencing 'significant cash flow issues.' As a result, it had terminated the services of its Chief Financial Officer George Brown.
The company runs a commodity pool operator, allowing customers invest in futures accounts that are managed by traders. In a letter to its clients, the company admitted its liabilities and that of the commodity pool operations 'greatly exceed' the available liquid assets. This may result in the net asset values being greatly affected.
This is the latest in the series of body blows to the futures industry after suffering two of its largest collapses with the failure of MF Global Holdings Ltd in 2011 and Peregrine Financial Group Inc in 2012. In both instances, client's funds went missing. For its part, AlphaMetrix LLC had, according to an Aug 24 regulatory filing, a total of USD146.6 million in client funds under its watch.
Commodity pools such as AlphaMetrix consolidates money from clients to invest in futures contracts and other derivatives. Through their system, individuals can invest in derivatives, a market that is dominated in institutional investors.
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