The Legacy of MF Global
From rcwhalen at Zero Hedge:
Purely as a matter of due diligence, no fiduciary will ever again be able to use a US-based broker dealer as a custodian. To do so would be reckless and would expose the fiduciary to claims of negligence in the event a loss similar to MF Global occurred.
Until the Congress rectifies the current bankruptcy laws and allows trustees to claw back payments made to secured lenders and other counterparties, there is no reason for any rational personal to allow a broker dealer to hold securities in custody. All of this business will go to the big banks, who will be just as happy to see the smaller dealers thrown into the meat grinder.