MF Global UK Limited in Special Administration · The references in this Report to the Act, Rules or Regulations are to Schedule B1 of the Insolvency Act 1986 (as amended), thnvestment

MF Global UK Limited – in Special Administration

Special Administrators’ Progress Report for the six month period

1 May 2013 to 30 October 2013

29 November 2013

1 See Notice: About this Report. All rights reserved.

© 2013 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.

Notice: About this Report

This Report has been prepared by Richard Heis, Michael Robert Pink and Richard Dixon Fleming, the Special Administrators of MF Global UK Limited (in special administration) solely to comply with their statutory duty under Rule 122 of the Investment Bank Special Administration (England and Wales) Rules 2011 to provide creditors and clients with an update on progress in the Special Administration and for no other purpose. This Report is not suitable to be relied upon by any person, or for any other purpose, or in any other context.

This Report has not been prepared in contemplation of it being used, and is not suitable to be used, to inform any investment decision in relation to the debt of or any financial interest in MF Global UK Limited (in special administration).

Rule 122 requires this Report to cover the six month period to 30 October 2013. However, where possible we have provided updated data beyond 30 October 2013; where this is the case we state the date the updated information relates to.

Any estimated outcomes for creditors included in this Report are illustrative only and cannot be relied upon as guidance as to the actual outcomes for clients, creditors or other stakeholders. Any person that chooses to rely on this Report for any purpose, or in any context, other than under Rule 122 of the Investment Bank Special Administration (England and Wales) Rules 2011 does so at their own risk.

To the fullest extent permitted by law, the Special Administrators do not assume any responsibility and will not accept any liability in respect of this Report.

Richard Heis and Michael Robert Pink are authorised to act as insolvency practitioners by the Institute of Chartered Accountants of England and Wales. Richard Dixon Fleming is authorised to act as an insolvency practitioner by the Insolvency Practitioners Association. The Special Administrators act as agents for the Company and contract without personal liability. The appointments of the Special Administrators are personal to them and, to the fullest extent permitted by law, KPMG does not assume any responsibility and will not accept any liability to any person in respect of this Report or the conduct of the Special Administration of the Company.



Glossary of terms

Act The Insolvency Act 1986 (as amended)

Affiliate(s) A company or companies within the MFG Holdings Group

ATT Absolute title transfer

CASS Client Asset Sourcebook

CMP Client Money Pool

Company/ MFG UK

MF Global UK Limited of 5 Churchill Place, Canary Wharf, London E14 5HU with company registration 01600658

Court High Court of Justice Chancery Division Companies Court

Directors Directors of the Company (as at 31 October 2011): Bradley Ira Abelow; Francis Kemper Cagney; David Moses Gelber; Richard Warren Moore; and Charles Graham Pendred

Distribution Plan Client Asset Distribution Plan approved by the Court on 18 July 2012

FCA Financial Conduct Authority

Finance USA MF Global Finance USA Inc.

FSCS Financial Services Compensation Scheme

FX Foreign Exchange

Group The Company and subsidiaries

ISDA International Swaps and Derivatives Association

KPMG KPMG LLP

MFG Holdings MF Global Holdings Limited

MFG Holdings Group

MF Global Holdings Limited and its subsidiaries

MFG Inc MF Global Inc.

MFG Services MF Global UK Services Limited (in administration)

Proposals Statement of Special Administrators’ proposals under Rule 59 of the Rules

PPE Primary pooling event

Regulations The Investment Bank Special Administration Regulations 2011

Rules The Investment Bank Special Administration (England and Wales) Rules 2011

SIPA Securities Investor Protection Act (US)

SIPA Trustee Trustee of MF Global Inc./Mr J Giddens

SIPC Securities Investor Protection Corporation (US)

Special Administrators

Richard Heis, Michael Robert Pink, and Richard Dixon Fleming of KPMG LLP

US United States of America

Weil Weil, Gotshal & Manges

$ United States dollar (unless otherwise stated)

€ Euro

The references in this Report to the Act, Rules or Regulations are to Schedule B1 of the Insolvency Act 1986 (as amended), the Investment Bank Special Administration (England and Wales) Rules 2011 and The Investment Bank Special Administration Regulations 2011 respectively. All other capitalised terms have the same definitions as those stated in the Client Asset Distribution Plan.



Contents

Page

Introduction 4

Executive summary 5

Distributions 6

Asset summary (House and Client Money) 9

Creditor and Client claims 11

Legal issues 15

Client Assets 19

Other key areas 21

Costs 22

Appendices

1. Statutory information

2. Special Administrators’ Abstract of receipts and payments for the period 1 May 2013 to 30 October 2013 and 31 October 2011 to 30 October 2013

3. Special Administrators’ Abstract of costs incurred but only partially paid as at 30 October 2013

4. Analysis of time costs for the period 1 May 2013 to 30 October 2013

5. Summary of charge out rates

6. Summary of disbursements for the period 1 May 2013 to 30 October 2013

26

27

35

36

37

38



Introduction

Purpose of this Report ■ This Report provides creditors and clients with an update of progress in the Special Administration for the six month period from 1 May 2013 to 30 October 2013 in accordance with Rule 122. The Special Administrators’ previous progress report was issued on 30 May 2013 covering the period 31 October 2012 to 30 April 2013.

■ All statutory and supporting information is set out in the attached appendices.

Website ■ The MFG UK website www.kpmg.co.uk/mfglobaluk is regularly updated with the latest information about the Special Administration.

Background ■ Richard Heis, Michael Pink and Richard Fleming of KPMG were appointed Special Administrators of MFG UK on 31 October 2011, by order of the Court following an application by the Directors of the Company.

■ The functions of the Special Administrators are being exercised jointly and severally by the Special Administrators.

■ This appointment followed the filing for Chapter 11 bankruptcy protection in the US by MFG Holdings and Finance USA on 31 October 2011. Also, on 31 October 2011 the SIPC instigated the SIPA liquidation of MFG Inc by a petition to the US District Court for the appointment of a SIPA trustee.

■ The Company traded as a broker-dealer in commodities, fixed income, equities, foreign exchange, futures and options and also provided client financing and securities lending services.

Report format ■ The following estates are dealt with separately throughout this Report. The estates are referred to as the following in the Report: a) House Estate or Non-Segregated estate; b) Client Money Pool (‘CMP’) or Segregated estate; and c) Client Assets.

http://www.kpmg.go.uk/mfglobaluk�



Executive summary

Key achievements, events and milestones during the period

House estate distributions

■ On 22 August 2013 the Special Administrators declared a first interim dividend of 43 pence in the pound to all unsecured creditors whose claims had been admitted for dividend purposes.

■ On 17 October 2013 the Special Administrators declared a second interim dividend of 22 pence in the pound.

■ The cumulative amount distributed to creditors with agreed claims is 65 pence in the pound.

Client Money Pool distributions

■ As previously reported, on 10 February 2012 the Special Administrators declared a first interim dividend of 26 cents in the dollar to all Client Money Claimants whose claims had been admitted for dividend purposes.

■ On 22 August 2013, the Administrators declared a second interim dividend of 44 cents in the dollar to be paid to all client money claimants whose client money claims have been admitted for dividend purposes.

■ The cumulative amount distributed to client money claimants with agreed claims is 70 cents in the dollar. Future distributions and illustrative financial outcome

■ During the period to which this Report relates, the Special Administrators published the following estimated illustrative financial outcomes as follows: – 31 March 2013 on 31 May 2013; – 30 June 2013 on 5 August 2013; and – 31 August 2013 on 14 October 2013.

■ Further illustrative financial outcomes will be provided in due course as events progress.

Return of client assets

■ Client assets of approximately £190 million have been distributed to Client Asset Claimants. The Special Administrators are attempting to contact those with assets remaining. There remain 206 clients with asset values of approximately £12 million.

US Settlement Agreement ■ The US settlement agreement set out in prior reports became unconditional in August 2013. Pension Settlement ■ A settlement has been agreed in the period with the Trustees of the MF Global UK Pension Fund. Details of the agreement are set out on

page 18.



House estate Distributions

General unsecured creditor distributions

■ On 22 August 2013, pursuant to Rule 179 of The Investment Bank Special Administration (England and Wales) Rules 2011, the Special Administrators declared a first interim dividend of 43 pence in the pound to all unsecured creditors whose claims had been admitted for dividend purposes.

■ On 17 October 2013 the Special Administrators declared a second interim dividend of 22 pence in the pound bringing the cumulative amount distributed to creditors with agreed claims to 65 pence in the pound.

■ Distributions to unsecured creditors total £460.0 million as at 30 October 2013. This is made up of distributions of £315.7 million to 1,792 general unsecured customers (excluding affiliates) and distributions of £144.3 million to affiliates. In addition deemed distributions of £55.4 million have occurred through the posting of margin to unsecured creditors during the process of transferring their open positions in the early days of the Special Administration.

■ A small number of distributions are yet to be made where creditors have not completed Know Your Customer checks in respect of certain creditors and bank accounts.

The Special Administrators have declared dividends of 65 pence in the pound to unsecured creditors whose claims had been admitted for dividend purposes.

House estate distributions

As at 30 October 2013 (65p in the £)

Claims (£m)

Total distributions

(£m)

Distributions paid to date

(£m) Distributions to

be paid (£m)

Deemed distributions

(£m) Number of claims (#)

Agreed – Third party unsecured creditors 569.0 369.8 315.7 11.6 42.5 1,792 Agreed – Unsecured affiliates(a) 226.0 146.9 144.3 2.6 - 8 Sub-total 795.0 516.7 460.0 14.2 42.5 1,800 Not Agreed – Third party unsecured creditors(b)

119.6 77.7 - 64.8 12.9 1,295 Not Agreed – Unsecured affiliates

23.8 15.5 - 15.5 - 8 Total non-seg claims 938.4 609.9 460.0 94.5 55.4 3,103 Note: (a) Amounts settled via the US settlement agreement (totalling £356.0 million) have been excluded from both the claim and distributions paid to date figures. This is discussed further on page 15. (b) Includes proposals sent but not agreed, and FSCS assignments yet to be paid. Source: Special Administrators’ records.



Client Money Pool Distributions (cont.)

Client money distributions

■ As previously reported, on 17 February 2012, the Special Administrators announced a first interim dividend of 26 cents in the dollar.

■ On 22 August 2013, the Special Administrators declared a second interim dividend of 44 cents in the dollar to be paid to all client money claimants whose client money claims had been admitted for dividend purposes.

■ The cumulative distribution declared on client money agreed claims is 70 cents in the dollar.

■ As at 30 October 2013, distributions totalling $707.2 million have been paid to 3,614 agreed client money clients. In addition, where clients had arranged directly with trading houses the transfer of asset positions from their MFG UK account to a replacement broker, shortly after the Special Administrators’ appointment, deemed distributions of $16.4 million occurred through the posting of margin when open positions were transferred in the early days of the Special Administration. A number of these clients are yet to agree their claim.

■ A small number of distributions are yet to be made where clients have not completed Know Your Customer checks in respect of certain clients and bank accounts.

The Special Administrators have declared dividends of 70 cents in the dollar to client money claimants whose claims have been admitted for dividend purposes.

CMP distributions

As at 30 October 2013 (70c in the $)

Claims ($m) Distributions paid

($m) Distributions to be

paid ($m) Deemed

distributions ($m) Number of claims (#)

Agreed – CMP Claimants 948.3 650.4 7.4 6.0 3,613 Agreed – CMP Affiliates 82.1 56.8 - 0.7 1 Sub-total 1,030.4 707.2 7.4 6.7 3,614 Not Agreed – CMP Claimants(a) 31.5 1.4(b) 15.0 5.7 1,068 Not Agreed – CMP Affiliates 27.8 - 15.5 4.0 4 Total client money claims 1,089.7 708.6 37.9 16.4 4,686 Note: (a) Includes proposals sent but not agreed, and FSCS assignments yet to be paid. (b) Distributions made to claimants where proposals value have then been updated, and are awaiting agreement . Source: Special Administrators’ records.



Future distributions and illustrative financial outcome Distributions (cont.)

Timing of future distributions to Client Money claimants and general unsecured creditors ■ The Special Administrators will publish an update to the MFG UK website if and when further distributions can be declared and paid. Illustrative financial outcome model ■ During the period the following illustrative financial outcomes have been published:

– As at 31 March 2013 on 31 May 2013; – As at 30 June 2013 on 5 August 2013; and – As at 31 August 2013 on 14 October 2013.

■ The tables below summarise the outcomes presented in the illustrative financial outcomes published in the period. As illustrated here the range of estimated outcomes from the CMP has reduced significantly from an initial range of $239 million between the high and low case to a range of $65 million. While the range of outcomes in the House estate has stayed similar the anticipated deficit/surplus has improved. This is principally due to the Special Administrators progressing a large number of classification disputes. Please note these should not be considered ‘best’ and ‘worst’ possible cases.

■ The published illustrative financial outcomes can be found on the MFG UK website (http://www.kpmg.com/UK/en/IssuesAndInsights/ArticlesPublications/Pages/mf-global-important-documents.aspx).

The Special Administrators will provide an update on the MFG UK website if and when further distributions can be declared and paid.

CMP

31 March 2013 30 June 2013 31 August 2013 Low Case ($m) High Case ($m) Low Case ($m) High Case ($m) Low Case ($m) High Case ($m) Funds available for distribution 924 936 915 928 918 931 Total Client claims (1,321) (1,094) (1,151) (1,099) (1,153) (1,099) Surplus/(Deficit) (397) (158) (236) (171) (234) (169) Variance to prior illustration - - 161 (13) 2 2 Source: Special Administrators’ records.

House estate

31 March 2013 30 June 2013 31 August 2013 Low Case (£m) High Case (£m) Low Case (£m) High Case (£m) Low Case (£m) High Case (£m) Funds available for distribution 1,376 1,487 1,395 1,464 1,400 1,471 Total Creditor claims (1,465) (1,452) (1,475) (1,411) (1,475) (1,414) Surplus/(Deficit) (89) 35 (80) 53 (75) 57 Variance to prior illustration - - 10 18 5 4 Source: Special Administrators’ records.

http://www.kpmg.com/UK/en/IssuesAndInsights/ArticlesPublications/Pages/mf-global-important-documents.aspx�



House estate Asset summary

As at 30 October 2013 the Special Administrators had recovered £1.2 billion of non-segregated assets with a further £48.7 million being re-allocated from the CMP to reimburse the general estate for CMP costs paid.

The Special Administrators continue to work with the Affiliates to agree inter-company claims and a process for the return of these amounts as early as possible.

Non-segregated assets

■ The Special Administrators had recovered £1.20 billion (previous report: £1.07 billion) of non-segregated assets in the estate as at 30 October 2013.

■ The recoveries in the non-segregated estate since the Special Administrators’ previous report are as follows:

– £91.8 million from banks;

– £0.3 million from clearing houses and exchanges; and

– £34.2 million from other sources (tax refunds, brokerage and account fees, dividend and interest income, claims assignment charges and FX amounts).

Non-segregated monies received and outstanding as at 30 October 2013

£000 Received Outstanding(b) Total Banks 596,272 43,009 639,281 Clearing Houses/Exchanges 471,149 50,552 521,701 Affiliates 1,691 11,425 13,116 Other receipts/realisations(a) 130,957 55,141 186,098 Total before CMP cost re-allocation 1,200,069 160,127 1,360,196 CMP cost re-allocation(c) 48,696 - 48,696 Total 1,248,765 160,127 1,408,892 Note: (a) Other receipts include the LME and LSE share sales, tax, dividend and interest income, brokerage

and account fee receipts, claims assignment charges and FX movements. (b) For illustrative purposes. May not represent expected further recoveries or all amounts outstanding. (c) Re-allocation from CMP to reimburse the general estate for costs paid in relation to the CMP. Source: Special Administrators’ records.

Outstanding non-segregated assets

■ At the date of this report the Special Administrators are in negotiation with one bank regarding the release of a significant outstanding balance. This negotiation accounts for almost all of the amount outstanding from Banks.

■ Similarly a significant sum is expected to be recovered from a Clearing House in the next few months. This recovery would account for the great majority of the clearing house debt.

■ The other receipts are due from a large number of other debtors, the largest (approximately £42 million) relates to a claim the Special Administrators have submitted to a tax authority. The quantum and timing of the recovery of these potential assets is uncertain.

Affiliate debtors

■ The quantum and timing of recoveries from affiliates remains uncertain.

Absolute title transfer (‘ATT’)

■ Where ATT claimants have agreed their ATT claims as house assets and the assets have been liquidated, the funds returned to the general estate have been included under amounts received.

■ Where ATT claimants are yet to agree the status of the assets, these assets are included in the amounts outstanding. Discussions are ongoing with these claimants.



Client money Asset summary (cont.)

Realisation of Client Money

■ The Special Administrators have recovered approximately $935.0 million (Previous report: $923.3 million) of client monies held by third parties as at 30 October 2013.

■ The $5.8 million of recoveries made into the CMP since the Special Administrators’ previous report have been received as follows:

– $3.5 million of interest and dividend income;

– $1.4 million received from banks; and

– $0.9 million from other sources (brokerage and account fees, sale of other assets, client charges and FX amounts).

■ Approximately 99% of the projected recoverable amount of client monies are held by Affiliates. The Special Administrators are in negotiations with those Affiliates to agree the release of these monies as part of agreeing wider settlements.

As at 30 October 2013 net receipts of $935.0 million had been collected by the Special Administrators. The Special Administrators are continuing to pursue the recovery of a further $54.3 million.

Client monies received and outstanding as at 30 October 2013

$000 Received Outstanding(c) Total Banks 465,788 245 466,033 Clearing Houses/Exchanges 443,617 30 443,647 Affiliates(a) 6,286 54,065 60,351 Other receipts/realisations(b) 19,348 - 19,348 Total before House estate re-allocations

935,039 54,340 989,379

Transfer from House estate for estate re-allocation and set-off

265,880 - 265,880

Net receipts 1,200,919 54,340 1,255,259 Note: (a) Receipts from affiliates are included with receipts from Clearing Houses/Exchanges in the receipts

and payments account on page 27. Outstanding amounts are based on the values of claims submitted.

(b) Interest income, brokerage and account fee receipts, income from client charges and FX movements. (c) For illustrative purposes. May not represent eventual further recoveries made or all amounts

outstanding. Source: Special Administrators’ records.



Status of statements Creditor and Client claims

Current progress ■ The breakdown of final statements issued to customers (excluding client asset customers, which are covered in the client assets section of

the Report), suppliers and affiliates, and whether or not these claims have been agreed as at 30 October 2013 is provided below. ■ The Bar Date for the first distribution to unsecured claims resulted in a substantial number of additional claims being received in respect of

German introducing broker claims. The Special Administrators are reviewing these claims. ■ The Special Administrators have now reviewed the majority of those claims which they did not recognise and have either rejected or accepted

them during the period, resulting in a slight increase in the value and number of non segregated claims issued or agreed as at 30 October 2013.

■ There has also been a slight increase in the number of segregated claims issued or agreed as a result of the reclassification of some accounts from unsecured creditors to Client Money claimants.

As at 30 October 2013 a total of $1.85 billion (previous report: $1.47billion) customer claims had been fully agreed.

As at 30 October 2013 $708.6 million has been paid to clients, and £460 million has been paid to general unsecured creditors.

Segregated Non Segregated Total Number PPE Value ($000) Number Value ($000) Number Value ($000)

Customers Fully agreed 3,613 948,265 1,607 906,294 5,220 1,854,559 Final statements sent but not agreed 1,053 13,655 383 73,230 1,436 86,885 Total trading statements issued 4,666 961,920 1,990 979,524 6,656 1,941,444 Trading statements to be issued 5 15,578 9 2,554 14 18,132 Total trading statements 4,671 977,498 1,999 982,078 6,670 1,959,576 Other MFG Inc – Agreed(a) 1 82,092 1 904,822 2 986,914 Other affiliates – Agreed - - 7 34,625 7 34,625 Other affiliates – Not Agreed 4 27,808 8 38,258 12 66,066 Suppliers – Agreed - - 185 12,226 185 12,226 Suppliers – Not Agreed - - 163 17,440 163 17,440 German introducing broker claimants – Not Agreed - - 720 83,547 720 83,547 Claim submitted being investigated by the Special Administrators – Not Agreed

10 2,267 20 16,283 30 18,550

Total 4,686 1,089,665 3,103 2,089,279 7,789 3,178,944 £ equiv 1,294,393

Note: (a) The MFG Inc Settlement includes an element of Client Assets and the agreement of an unsecured claim. This is discussed further on page 15 Source: Special Administrators’ records.



Rejected Claims and German Litigation Claims Creditors and Client claims (cont.)

Rejected claims

■ Following the special administration the Special Administrators received a large number of claims which exceeded the value of claims as per the records of MFG UK. Additionally, a number of claimants claimed to be entitled to client money and/or client asset protection where the contractual relationship did not support this. These claims were reviewed in detail and a number of claims were rejected or reclassified accordingly.

■ Classification Rejections: A total of 1,484 claims were rejected on the grounds that the claimant had made a claim for the wrong claim type (e.g. the claimant made a client money claim but, according to MFG UK’s records, that claimant had an unsecured claim only). All of these rejections related to claimants who ultimately had a valid claim against either the CMP or the unsecured estate or for client assets, but had simply submitted the wrong form. The vast majority of these claims were admitted as general unsecured claims and were agreed without the need to resubmit claims.

■ Full Rejections: A further 185 claimants had their client money and/or client asset and/or general unsecured claims rejected , totalling £1.1 billion, because they had no alternative valid claim. The Special Administrators consider that a number of these claimants may have valid claims against MFG Inc and/or MFG Services.

German introducing broker litigation claims (‘German Litigation Claims’)

■ The Special Administrators have received claims from 720 claimants with claims totalling $83.5 million.

■ A number of these claimants (approximately 154 with claims totalling $22.1 million) are recorded in the Company’s records as having filed litigation in the German federal courts prior to the special administration (‘Existing German Claimants’).

■ The majority of the claims (approximately 566 in number purporting to be owed $61.4 million) were not known to the Company prior to entering special administration (‘New German Claimants’).

■ The claims are creditor claims. A further more detailed assessment will determine the validity of the claims brought by both the Existing German Claimants and the New German Claimants.

As at 30 October 2013, 185 claims have been rejected in full by the Special Administrators.

Claims have been received totalling $83.5 million in relation to possible litigation in Germany.



FSCS Claims Creditors and Client claims (cont.)

Claims assigned to the Financial Services Compensation Scheme

■ 2,406 customers have assigned claims with a value of $89.3 million (combined client and creditor assignments) to the FSCS. The Special Administrators have been in dialogue with the FSCS since the early stages of the Special Administration. A protocol has been established whereby:

– All agreed claims are notified to the FSCS on a weekly basis via a secure internet exchange portal; and

– The Special Administrators provide information to the FSCS to assist it in its assessment of eligibility. The determination of whether a claim is protected is the decision of the FSCS.

■ To date, the FSCS has made compensation payments totalling approximately $65.1 million. The FSCS will compensate up to £50,000 for losses to eligible claimants however, there are still a number of potentially eligible claimants who have not submitted claims to the FSCS.

■ We understand that the FCA now considers that the rules on the eligibility of unincorporated associations and partnerships to claim on the FSCS for investment business did not properly implement the European Union Investor Compensation Schemes Directive (ICSD). As a result, the FCA is encouraging large unincorporated associations (such as some charities, clubs and societies) and large partnerships to notify the FSCS of their claim, even if they have been previously advised by the FSCS that they are not eligible, so that they can be assessed for FSCS eligibility under the revised criteria. Further information on the matter can be found on the FSCS website:

http://www.fscs.org.uk/news/2013/october/large-unincorporated-associati-wvmnhk917/index.html

■ As a result of the Judgment in the Special Administrators Hindsight Application handed down on 29 January 2013, the FSCS has now made top up payments (where distributions were previously being made based on the lower of the 31 October 2011 and latest valuations) to all eligible clients and creditors, with the exception of those who have unsecured claims in respect of Client Asset costs, they anticipate being able to make such payments shortly.

■ Payments made by the FSCS to clients includes flow through payments of $13.0 million to 187 customers whose claim exceeds the £50,000 compensation limit.

■ We understand the FSCS are currently working with their legal advisors to determine whether a client’s shortfall and/or parallel claim (as discussed further on page 17) is protected under the FSCS’s compensation rules, and will advise clients of their position once this has been determined. In the meantime the FSCS are working with the Special Administrators to put in place systems to allow the FSCS to determine a client’s shortfall and/or parallel claim, which should prevent any delay in payments to clients once any shortfall and/or parallel claims are agreed by the Special Administrators.

The Special Administrators have been working closely with the FSCS which has paid approximately $65.1 million to 2,406 customers on assigned claims of over $89.3 million.

http://www.fscs.org.uk/news/2013/october/large-unincorporated-associati-wvmnhk917/index.html�



A secondary market in claims has developed since the commencement of the Special Administration.

In addition to claims assigned to the FSCS, claims with a value of $1,167 million have been assigned to third parties.

Claims assignments Creditors and Client claims (cont.)

Claims assignments update (includes both seg and non-seg claims)

As at 30 October 2013 Number of claims (#) Total ($m)

Claims assigned to the FSCS (discussed on page 13) 2,406 89.3 Claims assigned to third parties 626 1,167.3 Total claims assigned 3,032 1,256.6

Source: Special Administrators’ records.

Assignments to third parties

■ As with other large insolvencies, a secondary market in the unsecured and segregated debt claims of the Company has developed since the commencement of the Special Administration.

■ To ensure an efficient and economical process for all parties involved, standardised documentation and a simple yet robust process was implemented.

■ To ensure the general estate has not had to bear additional costs of administering the assignment of claims, including conducting new Know Your Customer checks, acquirers of claims are required to pay a fee to MFG UK to register the assignments.

■ As at 30 October 2013, some 58 different third parties have registered 779 assignments (including 153 re-assignments) with MFG UK. This has generated approximately £925,000 to defray the costs of facilitating debt transfers.

Assignment of German litigation claims

■ A large proportion of the German Litigation claims have been assigned to two different third parties. The Special Administrators continue to work with both of these parties to ensure the German Litigation claims are dealt with in a batch process that further minimises the cost involved.



Settlement with US affiliates Legal issues

Settlement agreement with US affiliates

■ On 22 December 2012, the Special Administrators announced the signature of conditional settlement agreements with MFG Inc and MFG Holdings. As stated in that announcement, certain conditions needed to be satisfied before the settlement agreements became unconditional. The conditions were:

– the approval of the US Bankruptcy court to the agreement;

– a settlement with JP Morgan Chase that would release funds to MFG UK and see the withdrawal of its claim for $175 million against MFG UK; and

– the withdrawal of claims against MFG UK by MFG Holdings and MF Global Finance USA Inc.

■ As part of the settlement agreement, other litigation that was being pursued was also terminated.

■ Although the Special Administrators and JP Morgan Chase reached agreement on the terms of a settlement and release, JP Morgan Chase advised the Special Administrators that its agreement to such settlement and release was subject to the resolution of certain claims asserted against JP Morgan Chase in connection with MFG Inc’s SIPA proceeding, as well as a class action proceeding brought in the United States District Court on behalf of certain customers of MFG Inc.

■ MFG UK and MFG Inc agreed in principle to extend the stay of the legal proceedings between them to early August 2013 to accommodate the approval of the JP Morgan Chase settlements, with the intention that the settlement agreements would become unconditional after JP Morgan Chase obtained US District Court approval for its class action settlement and the relevant appeal period had expired.

■ On 19 March 2013 the SIPA Trustee of MFG Inc announced that JP Morgan Chase, the SIPA Trustee and the class action representatives had reached an agreement that, subject to being approved by the United States Bankruptcy and District Courts, would resolve those claims. On 3 July 2013, District Court Judge Victor Marrero and Bankruptcy Court Judge Martin Glenn, sitting jointly, granted the customer representatives’ motion for final approval of the JP Morgan Settlement and the SIPA trustee’s motion, respectively.

■ The appeal period for the order in the District Court was 30 days. Further to the expiration of the appeal period the conditions relating to the conditional settlement agreements with MFG Inc and MFG Holdings were satisfied and the settlement agreements became effective.

■ The conclusion of this settlement allowed us to declare a distribution to unsecured creditors on 22 August 2013.

A settlement with the US affiliates became unconditional in August 2013.



Bar Date for Client Money claims and Shortfall Application Legal issues (cont.)

Client money distribution application – imposition of bar date

■ On 2 May 2013, the Special Administrators applied to the Court seeking directions for the imposition of a procedure by which distributions from the CMP should be made (the ‘Client Money Distribution Application’).

■ The Client Money Distribution Application was required, amongst other reasons, because neither the FCA’s client money rules nor the Rules provided a mechanism for distributing from the CMP. As such, the Special Administrators and MFG UK (as trustee of the CMP) sought directions which, if granted, would provide a clear and fair procedure by which distributions from the CMP could be made (the ‘Client Money Distribution Procedure’), and facilitate the acceleration of distributions from the CMP. The proposed Client Money Distribution Procedure follows closely the mechanism contained in the Rules for making distributions to unsecured creditors.

■ The Client Money Distribution Order dated 11 June 2013 prescribes a distribution procedure for client money. Pursuant to that procedure, the Administrators announced that clients wishing to take part in the next distribution of client money could submit client money claims at any point up to and including 19 July 2013.

Client money – shortfall application

■ Following the judgment on the Hindsight Application, details of which are set out in previous reports, the Special Administrators filed an application on 8 May 2013 for directions on how to value a client’s unsecured claim into the general estate (if any) arising from any shortfall in the CMP (the ‘Shortfall Application’).

■ The Court handed down judgment on the Shortfall Application on 16 August 2013. The Judge acknowledged that the parties: “are agreed that a client with a contractual claim is in principle entitled to prove for that claim (a parallel claim), although it also has a claim to client money by reference to the relevant contract.” The Judge then divided the application into three issues.

– “the effect of an actual or anticipated distribution from the CMP on the amount for which a client may prove in respect of its parallel claim.” The Judge held that: “the amount of a provable debt by a client falls to be reduced by the amount of any distributions from the CMP, whether made before or after the proof of debt is submitted.”

– The Judge held that a client can make a shortfall claim insofar as the shortfall results from a breach of trust by the firm, but can only claim “in respect of a shortfall in payment of its client money entitlement to the extent that it exceeds its contractual claim or in a case where the client has no contractual claim.”

– Whether a client’s shortfall claim is limited such that it: “cannot exceed the contractual claim, if any, of such client” such that “there is no claim which the clients ..... can (be made) in respect of the amounts by which their client money entitlements exceed their contractual claims. For convenience I will call this the excess shortfall, without intending an oxymoron”. The Judge held that clients “can prove in respect of the excess shortfall” (if any).

■ Examples of the effect of this judgment on particular clients are included on the MFG UK Website. http://www.kpmg.com/UK/en/IssuesAndInsights/ArticlesPublications/Pages/mfglobaluk-shortfalls-application.aspx

The Client Money Distribution Order dated 11 June 2013 prescribes a distribution procedure for client money.

The Court handed down judgment on the Shortfall Application on 16 August 2013. The Special Administrators are working through the implications that the judgment may have on certain client and creditor claims.

http://www.kpmg.com/UK/en/IssuesAndInsights/ArticlesPublications/Pages/mfglobaluk-shortfalls-application.aspx�



Parallel Claims Legal issues (cont.)

Client money – Parallel Claims in the House estate

■ The judgment on the Shortfall Application described on the previous page determined that Client Money claimants whose contractual claims are not discharged in full from the CMP are entitled to a parallel claim in the House estate.

■ In order to determine the allowable Parallel Claims in the House estate the Special Administrators must first determine;

– the likely final distribution from the CMP; and

– how payments received to date (and in the future) from the CMP should be converted into sterling for the purposes of calculating what each client has received to date.

■ The Special Administrators have sought legal advice regarding the conversion of payments received to date and hope to be in a position to provide an update regarding this shortly. The initial advice was set out at paragraph 72 of the 11th witness statement of Richard Heis (available in the Court Application/Shortfall Application section of the Special Administrators’ website www.kpmg.co.uk/mfglobaluk). The Special Administrators are not yet able to accurately determine what the final distribution from the CMP will be. However, the Special Administrators are aware that there are a number of increased clients who may benefit from the Special Administrators prudently estimating what the final CMP distribution will be and we are considering whether such a prudent estimate of each clients’ Parallel Claim can then be established, upon which a distribution from the House estate can then be made. The complexities of estimating the final CMP distribution and updating our systems to allow for such a distribution means that it is unlikely that any such determination and subsequent distribution will be made until the first quarter of 2014. Any communication regarding this will be placed on the website.

■ Further to the judgment on the Shortfall Application the Special Administrators are required to calculate the percentage of any insufficiency in the CMP that is caused by a breach of CASS7 or CASS 7A (or other breach of trust by MFG UK) as at the point of MFG UK entering into Special Administration. The required calculations are being undertaken and are subject to similar complexities and estimates required for the Parallel Claim determinations. The Special Administrators estimate that an update in this regard will be provided in the first quarter of 2014.

The Special Administrators are working toward making the first parallel claim distribution to increasing clients early in the New Year.

http://www.kpmg.co.uk/mfglobaluk�



Pension Issues Legal issues (cont.)

Pension settlement

■ As a contingent liability of the estate, the Special Administrators had been reserving for the full value of the deficit of the UK group pension scheme. This liability had been calculated by the pension scheme trustees as £35.2 million (the ‘Section 75 Liability’).

■ The Special Administrators reached an agreement with the pension scheme trustees and MFG Services which enabled the trustees to purchase an insurance policy in the market sufficient to cover all future pension liabilities, at a sum significantly below the Section 75 Liability. The proportion of the cost that will be suffered by MFG UK is dependent on the total claims received by MFG Services and the extent to which MFG Services is able to reduce its share of the cost.

■ The benefit of some $10 million is to be shared between MFG UK and MFG Services, albeit the final allocation between them is dependent on future factors.

■ If this settlement had not been reached a warning notice was expected to be imposed by the Pensions Regulator at the end of October (which is likely to have led to a financial support direction (FSD)), primarily on the grounds that MFG UK was the principal beneficiary of the services of the MFG Services employees. Had the warning notice and subsequent FSD been issued, this would likely have led to significantly higher costs being incurred by MFG UK.

An agreement was reached with MFG Services and the pension scheme trustees which has capped the potential liability.



Distribution Plan Client Assets

US Settlement ■ Under the terms of the US settlement $196.5 million of the MFG Inc claim that related to certain of the ‘30.7’ T-bills was treated as an

Accepted Client Asset claim (as defined in the Distribution Plan). In addition, the US settlement also resulted in the Special Administrators gaining control of the previously ‘Not-Held Assets’. The value of the ‘Not-Held Assets’ totalled £16.2 million. The Special Administrators are currently in the process of returning these assets. As at 30 October 2013 £15.2 million of the previously ‘Not-Held Assets’ have been returned.

Client Asset Claimants ■ Claimant options forms (being the form which facilitates the return of client assets to successful claimants) have been issued to all 436 clients

with valid client asset claims who are set out in the schedules to the Distribution Plan. ■ The Special Administrators have identified a further 211 clients for which MFG UK held client assets. These are clients: (i) upon further

review, whose contractual relationship revealed that they were entitled to client asset protection; and (ii) who held dormant accounts as at the date MFG UK entered into special administration and whose client assets remained unclaimed for some period before MFG UK entered into special administration .

■ All clients with valid entitlements to client assets have been issued with a claimant options form. Costs ■ In order for each client to receive their client assets, they are required under the Distribution Plan to pay the shared costs of the distribution

process. This percentage was reduced substantially, primarily due to the US settlement. In August 2013, the Special Administrators revised the shared cost percentage from 6.74% to 1.554% and made rebate payments to all claimants who had already paid the higher percentage.

■ Clients are also responsible for paying certain specific costs relevant to their assets. Costs paid by claimants under the Distribution Plan result in an equivalent claim in the general unsecured estate.

The Distribution Plan was approved on 18 July 2012 by order of the Court.

Only 2% of the client assets, by value have yet to be returned.

The Distribution Plan, associated Schedules and the Order can be found in the Client Asset Distribution Plan section of the MFG UK website.

■ Client Assets are administered separately from the House & Client Money estates.

Client assets – Progress towards distribution

Clients Value(a)(£m) Value (%) Distributed 230(b) 190 94% Instructions received and awaiting distribution 12 8 4% Outstanding 194 4 2% Total 436 202 100% Note: (a) All values are as at 30 October 2011. (b) Contains MFG Inc. and a further 40 clients who still have a portion of their assets to be returned totalling £7 million. Source: Special Administrators’ records.



■ The Special Administrators urge clients to contact the Special

Administrators as soon as possible. Failure to return the appropriate forms by Friday 20 December 2013, will result in the client assets being appropriated to cover outstanding costs and the loss of the right to have the client assets returned.

Outstanding Client Assets Client Assets (cont.)

Outstanding Accepted Client Asset Claims ■ As at 30 October 2013, the value of Client Assets where clients

have yet to instruct the Special Administrators to facilitate the return of those assets totals £4.37 million.

■ The Special Administrators are currently in discussions with two clients who account for £3.75 million of the remaining value.

■ The Special Administrators have also been able to engage with clients accounting for a further £0.54 million of these assets.

■ Accordingly, the Special Administrators anticipate that as at 31 December 2013 only approximately £0.08 million of Client Assets will remain in the estate. (This is less than 0.1% of the total Client Asset estate). In addition to the £0.08 million of Client Assets that will remain in the estate there will be a number of delisted securities.

■ Almost all of these assets (approximately £0.08 million) were deemed to be dormant by MFG UK prior to the appointment of the Special Administrators. No activity has occurred on 82% of the deemed dormant accounts since 2007.

■ The Special Administrators continue to attempt to contact these clients. However, as at 30 October 2013, only one of these clients has been in contact with the Special Administrators.

■ The Special Administrators anticipate that as at 31 December 2013 they will have returned 99.9% of all client assets to clients. (They also expect to have realised all securities held by the general estate.)

■ This means that from 1 January 2014, all overheads and other costs of holding the assets will fall on the remaining 0.1% of client assets which have not yet been claimed. By mid-January those costs will exceed the value of the remaining assets. Accordingly, all unclaimed client assets will be appropriated in January 2014 to cover costs. The relevant clients will NOT have claims into the general estate with respect to those assets.

To date Client Assets worth £190 million, representing 94% of the value of all held Client Assets, have been returned.

The Special Administrators anticipate that as at 31 December 2013 only £0.08 million worth of Client Assets will remain in the estate.

Failure to return the appropriate forms by Friday 20 December 2013, will result in the client assets being appropriated to cover outstanding costs and the loss of the right to have the client assets returned.

Outstanding Client Assets

Clients Value (£’000s) Total 194 4,365 Clients 32 4,298

Positive response 18 4,284 No response 4 2 No current contact details 10 12 > £100 23 4,298 < £100 9 0

‘Dormant’ Clients 162 67 Positive response 1 1 No response 155 65 No current contact details 6 1 > £100 51 66 < £100 111 1




Operational matters Other key areas

Operations are being scaled back and the Special Administrators envisage being in a position to vacate the UK headquarters by mid 2014.

Area Key highlights/issues

Property and fixed assets

■ The Special Administrators continue to operate from MFG UK’s headquarters and benefit from a rent free period until June 2014. We do not anticipate operating from this site after June 2014. The Special Administrators have reached an agreement to surrender the premises to the landlord at the end of this period. We will require office space after June 2014 and we are currently in the process of determining what those requirements will be.

IT ■ The IT department consists of 15 permanent and 16 contract staff. Staff have been retained to support the wide range of IT systems which are required during the Special Administration.

■ Functionality has been retained to assist the Special Administrators with litigation and requests from regulators, including the FCA.

■ Plans have been developed to address the longer term data retention and access requirements in a way to reduce dependency on the existing infrastructure and minimise future costs once operations can be wound-down.

■ From 1 January 2014 the monthly data centre cost will be reduced significantly as we have reduced the footprint on the site. This will result in cost savings of approximately £100k per month.

Human Resources

■ There are currently 52 Company staff and 30 contractors working in the business, the majority of whom have been retained by the Special Administrators until February 2014 under retention contracts. An exercise is ongoing to determine who will be required beyond that date.

Corporate Tax

■ Tax returns for the periods to 30 October 2012 have been filed for MFG UK and pre-administration tax returns are in the process of being prepared for the MFG UK branch office in Australia.

■ No further tax returns are required with regard to MFG UK’s France based operations.

Operational Tax

■ Prior to Special Administration, the Company suffered withholding taxes on non-UK dividends received. ■ To date the Special Administrators have submitted withholding tax reclaims totalling €54 million. Further EU withholding tax

reclaims are being considered.



Costs

The Special Administrators’ remuneration must be approved by the Creditors’ Committee and is subject to review by an independent third party fee reviewer.

In the six months to 30 October 2013, the Special Administrators’ time costs totalled £11.6 million.

Special Administrators’ remuneration

■ A receipts and payments account for the period from 1 May 2013 to 30 October 2013 is attached at Appendix 2.

■ A detailed analysis of the Special Administrators’ time and costs for the various areas of work carried out to 30 October 2013, is attached as Appendix 4.

■ The Special Administrators continue to operate under a discounted fee structure as agreed with the Creditors’ Committee. A summary of current charge out rates, for each grade of staff, is also attached as Appendix 5.

■ The statutory provisions relating to remuneration are set out in Rule 196. Further information is given in the Association of Business Recovery Professionals’ publication A Creditors Guide to Administrators’ Fees, which can be found at the R3 website at http://www.r3.org.uk/media/documents/technical_library/SIPS/SIP%209%20E&W.pdf. However if you are unable to access this guide and would like a copy please email [email protected].

■ It is for the Creditors’ Committee to determine the basis on which the Special Administrators’ remuneration is to be fixed. At the request of the Creditors’ Committee the Special Administrators have engaged an independent fee reviewer to review the costs of the Special Administration and report to the Creditors’ Committee.

■ In the six month period to 30 October 2013, we have incurred time costs of £11,580,686 representing 30,281 hours at an average hourly rate of £382. This also includes work undertaken in respect of IT, corporate tax, VAT, employee, pensions and health and safety advice from KPMG in-house specialists.

■ Total time costs on MFG UK to 30 October 2013 are £80,416,390 of which a total of £74,350,329 has been drawn on account as at 30 October 2013.

■ Creditors are advised that any additional information regarding other expenses charged for the period is available from the Special Administrators upon request by any Secured Creditor or any unsecured creditor(s) with at least 5% in value of the unsecured debt in accordance with Rule 201. This request must be made within 21 days of receipt of the attached Report. In addition, creditors are reminded that the quantum can be challenged by any Secured Creditor or any unsecured creditor(s) with at least 10% in value (including that creditor’s claim) of the unsecured debt or a client with the concurrence of clients representing at least 10% of the total claims in respect of client assets held by making an application to Court in accordance with Rule 202 within eight weeks of receipt of the attached Report. The full text of these rules can be provided upon request.

Disbursements

■ Disbursements in the six month period to 30 October 2013 total £636,704, which includes amounts paid in relation to the administration of MFG Services and KPMG affiliates discussed below. A detailed breakdown between Category 1 and Category 2 disbursements can be found in Appendix 6.

■ Disbursements to 30 October 2013 total £3,293,945 of which £3,231,823 has been drawn as at 30 October 2013.

Payments to KPMG affiliates

■ Costs of £140,334 have been incurred from KPMG affiliates for professional services and £129,786 has been paid as at 30 October 2013.

■ Costs of £203,200 have been incurred for seconded staff from KPMG affiliates and £192,394 has been paid as at 30 October 2013.

http://www.r3.org.uk/media/documents/technical_library/SIPS/SIP 9 E&W.pdf�

http://www.r3.org.uk/media/documents/technical_library/SIPS/SIP 9 E&W.pdf�



Costs (cont.)

MF Global UK Services Limited (in administration) fees

■ MFG Services is the management services company providing human resources to MFG UK. In accordance with the terms of a management agreement entered into between MFG UK and MFG Services, MFG UK’s Creditors’ Committee approved a resolution that the costs of this administration would be paid out of the MFG UK estate as a Category 2 disbursement.

■ Fees for the six month period to 30 June 2013 of £360,693 were approved by the Creditors’ Committee and have since been paid.

■ Total fees paid relating to the MFG Services administration to 30 June 2013 are £1,636,959. A further £208,921 of time costs has been incurred between 1 July 2013 and 30 October 2013.

Future projected costs

■ The Special Administrators’ strategy has been to distribute assets to stakeholders as expediently as possible and keep costs to a minimum. The Special Administrators’ have prepared a budget for future projected costs and this will be reflected in the next illustrative financial outcome.

The Special Administrators’ have prepared a budget for future projected costs and this will be reflected in the next illustrative financial outcome.



-

1,000

2,000

3,000

4,000

5,000

6,000

Oct 11 to Apr 12

May 12 to Oct 12

Nov 12 to Apr 13

May 13 Jun 13 Jul 13 Aug 13 Sep 13 Oct 13

Thou

sand

s (£

)

Quarterly Rolling Average

Costs (cont.)

There has been a downward trend in the average monthly costs since the start of the Special Administration.

Monthly costs are now less than half of those incurred in the early stages of the Special Administration.

Discussion of time cost trends

■ The months with increased time costs result from the billing cycle being five weeks (as indicated above) rather than the four week cycle on other months.

■ The increase in the quarterly rolling average in October was principally due to the work involved in declaring and paying the first interim distribution to unsecured creditors and a second interim distribution to clients.

Special Administrators' time costs by month

Average monthly run rate

5 week month

5 week month 5 week

month


Appendices 1. Statutory information

2. Special Administrators’ Abstract of receipts and payments for the period 1 May 2013 to 30 October 2013 and 31 October 2011 to 30 October 2013

3. Special Administrators’ Abstract of costs incurred and not paid as at 30 October 2013

4. Analysis of time costs for the period 1 May 2013 to 30 October 2013

5. Summary of charge out rates

6. Summary of disbursements for the period 1 May 2013 to 30 October 2013



Appendix 1 Statutory information

Company name ■ MF Global UK Limited (in Special Administration)

Company number ■ 01600658

Trading names ■ MF Global ■ MF Global Direct ■ MF Global Markets

FCA registration number ■ 106052

Date of incorporation ■ 27 November 1981

Registered office ■ 5 Churchill Place, Canary Wharf, London E14 5HU

Previous address ■ Sugar Quay, Lower Thames Street, London EC3R 6DU

Court ■ High Court of Justice, Chancery Division, Companies Court

Court reference ■ 9527 of 2011

EC Regulation on insolvency proceedings (1346/2000)

■ The EC Regulation does not apply

Special Administrators ■ Richard Heis, Michael Pink and Richard Fleming

Administrators’ business address ■ 8 Salisbury Square, London EC4Y 8BB

Date of appointment ■ 31 October 2011

Appointer ■ Court

Para 100(2) statement ■ In accordance with Rule 8 (3) (e), any acts required or authorised under all enactment to be done by either or all of the Special Administrators may be done by all or any one or more of the persons for the time being holding that office.

Directors (as at 31 October 2011) ■ Bradley Ira Abelow, David Moses Gelber, Francis Kemper Cagney, Richard Warren Moore and Charles Graham Pendred

Secretary (as at 31 October 2011) ■ Vicki Kong

Shareholder ■ Wholly owned by MF Global Holdings Europe Limited



MF Global UK Limited (in special administration): Client Money Pool receipts and payments accounts

(000) £ $ € Various other currencies $

Period total 1 May 2013 – 30 October

2013 ($)

Cumulative total 31 October 2011 – 30

October 2013 ($) Receipts Collateral/cash from banks - - - - - 464,329 Collateral/cash from exchanges/clearing houses/brokers - 47 - - 47 449,904 Sale of other assets - 686 - - 686 686 Sale of equities 28 1,385 4 10 1,445 6,181 Sale of fixed inc (bonds, T-Bills, etc.) - - - - - 3,234 Receipts re repayment of credit lines - 183 - - 183 196 Dividend Income 183 2,046 484 (90) 2,915 6,903 Gross Interest 17 532 - - 559 3,278 Income from Client Charges 73 - - - 117 117 Reallocation of Client Assets - 191,954 - - 191,954 191,954 Sundry refunds - - 1 - 2 2 Gross up of set-off with House estate - 73,926 - - 73,926 73,926 Adjustment for Client Asset distribution(a) (230) (196,012) (10) 323 (196,072) (206,874) Termination of Other Market Contracts 9 - - - 14 58 Total receipts 79 74,747 479 243 75,776 993,894 Payments Client money distributions (12,353) (469,099) - - (488,951) (708,558) Allocation of costs from House estate - (78,985) - - (78,985) (78,985) Bank charges (6) (9) - - (19) (63) Professional Fees - - - - - (8) Post administration receipt refunds - - - - - (8) Receipts reallocated from Segregated to Non-segregated - - - - - (5,991) Total payments (12,359) (548,093) - - (567,955) (793,613) Net position (12,280) (473,346) 479 243 (492,179) 200,281 Currency exchange (refer to Note 2) (1,452) 2,746 (475) (235) (476) (272) Effect of revaluing previous R&Ps at 30 October 2013 FX rates (refer to Note 2) - - - - - (654) Total cash movement for the period (13,732) (470,600) 4 8 (492,655) 199,355 Note: (a) Client Assets have been realised and distributed as reflected in the table on page 28. Source: Special Administrators’ records.

Appendix 2 Special Administrators’ Abstract of receipts and payments for the period 1 May 2013 to 30 October 2013 and 31 October 2011 to 30 October 2013



MF Global UK Limited (in special administration): Client Asset receipts and payments accounts

(000) £ $ € Various other currencies $

Period total 1 May 2013 – 30 October

2013 ($)

Cumulative total 31 October 2011 – 30

October 2013 ($) Receipts(a) 230 196,012 10 (323) 196,070 206,874 Payments(b) (415) (192,755) (61) - 193,505 (203,506) Balance held 3,368 Note: (a) Receipts reflect realisations from sales of equities, dividends and corporate actions. (b) Distribution currencies are chosen by the Client Asset claimant and as such distributions are only made in these currencies. Source: Special Administrators’ records.

Appendix 2 Special Administrators’ Abstract of receipts and payments for the period 1 May 2013 to 30 October 2013 and 31 October 2011 to 30 October 2013 (cont.)



MF Global UK Limited (in special administration): Non-segregated assets receipts and payments accounts

(000) £ $ € Various other currencies £

Period total 1 May 2013 – 30 October 2013 (£)

Cumulative total 31 October 2011 – 30 October 2013 (£)

Receipts Sale of Fixed Inc (bonds, T-Bills, etc.) - - - - - 289,378 Sale of Equities – Stocks 1,476 371 3,359 89 4,672 73,891 Sale of Equities – Investments - - - - - 38,319 Sale of Other Assets - 147 - - 92 4,331 Termination of Other Market Contracts 10 - 4,915 568 4,786 23,001 Termination of ISDA Contracts - 42,147 2,075 - 28,004 88,412 Collateral/cash from banks 46,432 8,816 4,413 4,718 60,415 326,870 Collateral/cash from exchanges/clearing houses/brokers 4,618 - 569 2,837 7,942 271,516 Other Receipts 7,940 6,457 1,973 167 13,799 44,539 Allocation of costs to CMP 48,696 - - - 48,696 48,696 VAT refunds 3,719 - - - 3,719 19,960 Gross Interest 1,820 92 54 37 1,960 6,862 Output VAT (payable) 451 - - - 451 1,167 Suspense account - - - - - 136 Total receipts 115,162 58,030 17,358 8,416 174,536 1,237,077 Source: Special Administrators’ records.




MF Global UK Limited (in special administration): Non-segregated assets receipts and payments accounts (cont.)

(000) £ $ € Various other currencies £

Period total 1 May 2013 – 30 October 2013 (£)

Cumulative total 31 October 2011 – 30 October 2013 (£)

Payments Special Administrators’ Fees and Disbursements (21,073) - - - (21,073) (77,789) Legal and professional fees (3,595) - - - (3,595) (28,834) Other payments (4,995) (4,145) (475) - (7,981) (23,475) Dividends to Non-segregated creditors (454,632) (8,561) - - (459,959) (459,959) Transfer to Client Money Pool - (191,954) - - (119,450) (119,450) Gross up of set-off with CMP (45,577) (45,577) (45,577) PAYE and NIC (2,684) - - - (2,684) (19,220) Input VAT (receivable) (4,382) (172) - - (4,490) (18,117) Irrecoverable VAT (1,296) - - - (1,296) (4,485) Wages and salaries (2,119) - - - (2,119) (24,163) Loan to MFG Services (10,000) - - - (10,000) (10,000) Settlement with Pension Trustees (19,000) - - - (19,000) (19,000) Total payments (569,353) (204,832) (475) - (697,224) (850,069) Net position (454,191) (146,802) 16,883 8,416 (522,688) 387,008 Currency exchange (refer to Note 2) 11,098 (3,804) - (8,324) 407 11,688 Effect of revaluing previous R&Ps at 30 October 2013 FX rates (refer to Note 2) - - - - - (2,569) Total cash movement for the period (443,093) (150,606) 16,883 92 (522,281) 396,127 Source: Special Administrators’ records.




Notes: 1. Statement of Affairs ■ There are no 'estimated to realise' figures as the Directors detailed realisations of all asset categories as 'uncertain' in their Statement of Affairs. 2. Currency exchange ■ The receipts and payments accounts are prepared using the 30 October 2013 foreign exchange spot rates. The Special Administrators have periodically converted foreign currency

balances received into GBP (for the unsecured estate) and USD equivalent (for the Client Money Pool) in order to minimise exposure to movements in foreign exchange rates. ‘Currency exchange’ refers to the difference between the spot rates applicable on the day of each actual receipt compared to the actual spot rates used for converting currencies in this receipts and payments account.

Effect of revaluing previous receipts and payments at 30 October 2013 FX rates Cumulative receipts and payments totals detailed in progress reports to date have been valued using the FX spot rates applicable on 30 April 2012, 30 October 2012, 30 April 2013

and 30 October 2013 respectively for each six month reporting period. This line reflects the adjustment required to revalue the previous receipts and payments accounts at the 30 October 2013 FX spot rates.

3. Suspense account ■ Cash received into the Company’s post-administration bank accounts from third parties, the source and/or nature of which is yet to be determined, is reflected under the heading

‘Suspense account’ until such time as the transactions are fully identified and posted to the appropriate ledger accounts. 4. Receipts – Other 5. Payments – Other


Non-segregated 'Other' payments comprise

£000 Current Period MFGH Agreed Settlement Expense 2,041 IT suppliers 2,079 Property Expenses 164 Rates 222 Telephone and data services 68 Dividend income – Dividends reallocated to client asset claimants 323 Refund of client asset shared costs 2,988 Miscellaneous other payments 96 Total 7,981 Source: Special Administrators’ records.

Non-segregated 'Other' receipts comprise

£000 Current Period Repayment of Credit Lines by clients 9,736 Dividend income(a) (323) Brokerage fees 1,587 Book debts 91 Client charges 1,824 Post Admin Receipt re Provision of IT Services 2

Custodian fee – STO agreement 882 Total 13,799 Note: (a) Dividend income in this period includes a reversal from a prior period where the original receipt related to

a Client Money claim. Source: Special Administrators’ records.



Notes (cont.):

6. Special Administrators’ Fees and Disbursements

7. Interest

■ All bank accounts held attract a market rate of interest. Where possible, one or three month money market deposits have been placed on significant cash balances in order to attract more favourable interest rates.

8. Recharge of non-segregated costs

■ All costs incurred with regard to the Special Administration have to date been funded out of the out of the general estate. A proportion of these costs will be re-allocated to the CMP funds and reimbursed to the general estate once the quantum has been agreed with Creditors’ Committee.



Summary of total payments to Special Administrators and their affiliates

£ 1 May 2013– 30 October 2013 Total to 30 October 2013 Special Administrators’ fees (post appointment) 20,265,058 74,350,329 Special Administrators’ fees (pre-appointment) - 206,891 Disbursements MFG Services Administrators’ fees 360,693 1,636,959 Fees paid to KPMG affiliates for professional services 28,221 129,786 Fees paid to KPMG affiliates for secondee staff 111,177 192,394 Disbursements – Travel, accommodation and subsistence 112,463 518,339 Other Disbursements (predominantly software maintenance) 195,638 754,344 Total disbursements 808,192 3,231,823 Total fees and disbursements 21,073,250 77,789,043 Source: Special Administrators’ records.



Notes (cont.):

9. VAT

■ All receipts and payments are shown net of VAT.

10. Additional information

■ Creditors are advised that any additional information regarding other expenses charged for the period is available from the Special Administrators upon request by any Secured Creditor or any unsecured creditor(s) with at least 5% in value of the unsecured debt in accordance with Rule 201. This request must be made within 21 days of receipt of the attached Report. In addition creditors are reminded that the quantum can be challenged by any Secured Creditor or any unsecured creditor(s) with at least 10% in value (including that creditor’s claim) of the unsecured debt or a client with the concurrence of clients representing at least 10% of the total claims in respect of client assets held by making an application to Court in accordance with Rule 202 within eight weeks of receipt of the attached Report. The full text of these rules can be provided upon request.


Non-segregated ‘VAT refunds‘ comprise

£000 Current Period To 30 October 2013 Post-appointment VAT 3,719 14,360 Pre-appointment VAT - 5,600 Total 3,719 19,960





■ The realisation of MFG UK’s assets and recovery of house and non-segregated monies, together with the client monies recovered, means that the Special Administrators hold significant cash balances at any one point in time.

■ Currency risk has largely been addressed by the conversion of foreign currencies to Sterling in the case of the house estate and into US $ in the case of client monies, with only minimal balances held in other denominations to meet operational needs.

■ The Special Administrators have continued to invest MFG UK’s cash with the objective of protecting capital rather than searching for maximum investment returns. The Special Administrators' clearing bank services are provided by four high street banks, and cash for both the segregated and house estates has been deposited (in the form of current accounts, short term deposits or money market deposits) in varying amounts with these banks for diversification purposes. The banks were selected on the basis of their credit ratings and lack of conflicts; all banks currently have ‘A’ credit ratings or above, and this continues to be monitored.

Segregated cash balances: Breakdown by foreign currencies

30 October 2013 $ 000 FC 000(a) GBP 729 453 USD 201,296 201,296 EUR 695 505 AUD 2 2 CAD 1 1 CHF 1 1 HKD - - JPY - 14 NOK - - SEK 1 3 ZAR - 1 Total cash in hand 202,723 Note: (a) Amounts shown in local currency. (b) This includes the balance of the pages 27 and 28 and includes the Client Asset balance to be paid over. Source: Special Administrators’ records.

Non-segregated cash balances: Breakdown by foreign currencies

30 October 2013 £000 FC 000(a) GBP 367,899 367,899 USD 2,317 3,723 EUR 25,822 30,160 DKK 69 605 NOK 14 135 SEK 1 6 ZAR 5 84 Total cash in hand 396,127 Note: (a) Amounts shown in local currency. Source: Special Administrators’ records.



Appendix 3 Special Administrators’ Abstract of other costs incurred but not fully paid as at 30 October 2013


■ The table above show costs accrued in the six months to 30 October 2013 that have not been fully paid. The costs are shown net of any VAT.

■ Other costs is comprised of IT, occupancy and contractor costs.

■ In addition, a full breakdown of payments made during the period can be found in the schedule of receipts and payments at Appendix 2.

■ Creditors are advised that any additional information regarding other expenses charged for the period is available from the Special Administrators upon request by any Secured Creditor or any unsecured creditor(s) with at least 5% in value of the unsecured debt in accordance with Rule 201. This request must be made within 21 days of receipt of the attached Report. In addition creditors are reminded that the quantum can be challenged by any Secured Creditor or any unsecured creditor(s) with at least 10% in value (including that creditor’s claim) of the unsecured debt or a client with the concurrence of clients representing at least 10% of the total claims in respect of client assets held by making an application to Court in accordance with Rule 202 within 8 weeks of receipt of the attached Report. The full text of these rules can be provided upon request.

Schedule of other costs incurred but not fully paid as at 30 October 2013

(£) Incurred and unpaid Partially paid post

30 April 2013 Outstanding Special Administrators’ fees and disbursements

■ Fees 6,066,061 - 6,066,061 ■ Secondee staff 10,805 - 10,805 ■ Disbursements 72,670 - 72,670

Unpaid fees on MFG UK Services (1 July – 30 October 2013) 208,921 - 208,921 Legal fees and disbursements ■ Weil 503,941 - 503,941 ■ Norton Rose - - - ■ Counsel 90,100 - 90,100 ■ Disbursements 3,232 - 3,232 Other costs 1,488,784 (246,115) 1,242,669 Total 8,444,514 (246,115) 8,198,399 Source: Special Administrators’ records.



Appendix 4 Analysis of time costs for the period 1 May 2013 to 30 October 2013

MF Global UK (in special administration) time costs for the period 1 May 2013-30 October 2013

Partner/Director Manager Administrator Support Total hours Time cost (£) Average hourly rate (£) Operations Cashiering 17.80 749.40 1,106.00 - 1,873.20 646,325.50 345.04 HR 144.20 - 2.00 - 146.20 104,124.00 712.20 Tax 147.00 200.95 299.95 2.50 650.40 296,367.75 455.67 Administrative and project management 587.65 1,047.00 713.5 26.75 2375.1 1,108,331.50 466.65 Communications 64.90 11.80 4.70 - 81.40 54,280.50 666.84 IT systems and infrastructure 23.10 2,251.05 4,416.30 - 6,690.45 2,246,844.00 335.83 Creditors and clients Creditors' Committee 60.70 114.50 25.20 4.75 205.15 101,731.50 495.89 Claims management 649.90 3,618.60 6,540.55 302.20 11,111.25 4,080,664.00 367.26 Distributions 150.25 1,468.70 1,416.90 44.10 3,079.95 1,252,981.00 406.82 Realisation of assets Trading - 124.00 7.50 - 131.50 56,377.50 428.73 Cash and investments 100.45 73.50 871.90 - 1,045.85 390,750.75 373.62 Sale of business - 9.00 - - 9.00 4,905.00 545.00 Other assets 430.10 474.10 136.40 4.20 1,044.80 563,542.75 539.38 Statutory and compliance Statement of affairs Investigations 7.20 484.55 629.70 - 1,121.45 352,344.25 314.19 Regulatory reporting 14.30 - 7.00 - 21.30 12,603.50 591.71 Statutory reporting 69.70 132.50 248.50 4.00 454.70 181,186.50 398.47 Other compliance 115.90 27.25 55.05 19.55 217.75 116,057.00 532.98 Sub-total in period 2,583.15 10,786.9 16,481.35 408.05 30,259.45 11,569,417.00 382.34 Travel at 50% 10.00 - 11.75 - 21.75 11,268.75 518.10 Total in period 2,593.15 10,786.90 16,493.10 408.05 30,281.20 11,580,685.75 382.44

Note: All staff who have worked on this assignment, including cashiers and secretarial staff, have charged time directly to the engagement and are included in the analysis of time spent. The cost of staff employed in the central administration function is not charged directly to the engagement but is reflected in the level of charge out rates.




Appendix 5 Summary of charge out rates

Summary of charge out rates in operation during the course of the special administration

£ Full scale As agreed with the Creditors’ Committee

To 30 Sep 2014(a) 31 Oct 2011 to 31 Dec 2011 1 Jan 2012 to 31 Dec 2012 1 Jan 2013 to present

Restructuring, Corporate Finance, Tax and any other relevant in-house advice Partner/Associate Partner 905 750 725 745 Director 850 700 635 660 Senior Manager 815 540 525 545 Manager 670 430 420 435 Senior Administrator/Assistant Manager/Consultant 500 350 310 325 Administrator (Grade 2 and higher) 380 280 250 260 Administrator (Grade 1) 380 195 175 185 Support staff 130 110 100 100 Intern 45 50 50 50

Note: (a) KPMG (UK) scale rates as at 1 October 2013 and discussions with the Creditors’ Committee. Source: Special Administrators’ records.



■ In accordance with the Statement of Insolvency Practice 9 (SIP) insolvency office holders have a duty to split their disbursements between Category 1 and Category 2.

■ Category 1 disbursements relate to costs where specific expenditure has been incurred in relation to the appointment, and represent a payment to an independent third party. Category 1 disbursements may include for example travel expenses, postage and advertising. These disbursements may be drawn without prior approval.

■ Category 2 disbursements are costs that are incurred in relation to the appointment, but not payable to an independent third party. They may include shared or allocated costs, for example business mileage. Category 2 disbursements may be drawn if they have been approved in the same manner as an office holder’s remuneration.

■ The software licence fees relate to the usage of commercially available systems used by KPMG to enable the Special Administrators to efficiently search and review MFG UK data, whilst maintaining an audit trail of review activity. The costs are based upon the quantum of data processed but also include associated charges to cover secure web based hosting and secure access to the review system.

Appendix 6 Summary of disbursements for the period 1 May 2013 to 30 October 2013

Summary of disbursements incurred from 1 May 2013 to 30 October 2013

£ Category 1 Accommodation and subsistence 24,971 Travel 64,589 Third party trader 319 Other (predominantly ICT costs) - Printing and Consumables 1,822 Telecoms 6

91,708 Category 2 MFG Services Administrators’ fees 360,693 Software Maintenance 87,532 Professional services provided by other KPMG firms 38,769 Staff provided by other KPMG firms(a) 57,836 Mileage 167

544,996 Total disbursements 636,704

Note: (a) Relates to staff secondment fees paid to KPMG in the Channel Islands. Source: Special Administrators’ records.

See Notice: About this Report. All rights reserved.

© 2013 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.

The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International Cooperative (KPMG International).

Documents

MF Global UK Limited in Special Administration · The references in this Report to the Act, Rules or Regulations are to Schedule B1 of the Insolvency Act 1986 (as amended), thnvestment