UPDATE 1-Australia ag futures trading spikes on MF Global cover
* Wheat futures volumes surge to over 11,000 contracts
* Trading had slowed to a trickle after MF Global collapse
* ASX says continuing to manage exposure to MF Global
* Adminstrator expects to provide more information by Friday (Updates trading volumes, administrator's comment)
By Bruce Hextall
SYDNEY, Nov 7 (Reuters) - Traded volumes on Australian wheat futures spiked on Monday after slowing to a trickle last week in the wake of the collapse of U.S. futures broker MF Global Holdings Ltd , the key market maker in Australian grain futures.
More than 8,000 eastern milling wheat contracts <0#YVW:> were traded by late afternoon Sydney time, including trades during the Friday night session.
Also more than 3,000 Western Australia Wheat futures <0#YWK:> had traded on bourse operator ASX Ltd's 24 hour agricultural commodities futures trading platform.
Average volumes before MF Global's collapse were around 1,800 combined contracts per day, according to ASX.
For the most active January milling wheat contract the volume jumped to 6,179 lots by 0414 GMT, the highest ever .
Traders said the volumes traded on the ASX 24 platform on Monday reflected pent-up hedge demand following inactivity in the wake of the collapse of MF Global.
"From the volumes traded it probably implies that some people are looking to re-establish positions they had on as well as some pent-up demand," said Brett Cooper, senior market manager with INTL FCStone Australia, adding that the pick-up in volumes was encouraging.
It followed the largest futures operator in the United States, the CME Group, issuing a notice of 'hold' to its clients late Sunday for any accounts transferred from MF Global.
CME said it was verifying the collateral allocated to each customer involved in the bulk transfer of positions from the futures brokerage.
The ASX suspended trading of agricultural futures last Tuesday after MF Global in the United States applied for bankruptcy protection.
The suspension was lifted on Wednesday but traders last week were reluctant to step into the gap left by MF Global and make a market, wary of uncertainty created by the firm's demise.
MF Global's Australian operations were placed under the administration of accountancy firm Deloitte.
The ASX started closing out MF Global's positions last week.
"It effectively means the clients of MFGA (MF Global Australia) have no agricultural hedge positions in market," said Chris Campbell, partner at Deloitte and administrator of MFGA.
Campbell said the ASX was still provide the information regarding the close out of all MFGA's positions.
"They haven't finished the process and they haven't given me the information and more importantly when we get the cash," said Campbell.
Once the data was provided Campbell said that would be reconciled with the cash received by the administrator.
"With futures in particular , it's fairly complicated process actually putting that cash back into the clients' accounts," he said.
Campbell said he hoped to be in a position to be able provide more information to MF Global's creditors by Friday.
ASX advised MF Global clients wanting to continue to trade ASX 24 futures to enter new client agreements with other futures broking firms trading on the ASX 24 platform.
The bourse operator late last week issued a discussion paper to market participates, marked "strictly confidential", which sources said had proposed a tender process for grains and wool futures held by its clearing house on behalf of MF Global.
"Obviously we've continued to communicate with relevant market stakeholders to keep them informed about what ASX's actions are," said Bland, but declined to comment on the discussion paper.
ASX is continuing to manage the exposure its clearing house had to MF Global.
"ASX's clearing house is continuing to actively manage its exposure to MF Global which essentially means closing out or eliminating positions," Bland told Reuters.
Exchange clearing houses guarantee both sides of an exchange-based trade, storing collateral posted by registered brokers that provides a cushion against large trading losses or potential defaults.
In Australia, MF Global was also an active player in the high leverage contract-for-difference (CFD) market, involved in placing bets on foreign exchange and share movements. (Editing by James Regan)
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