By the time you read this, stories about MF Global's implosion may be buried deep underneath a new onslaught of news and economic releases. As I first typed these words on November 29, 2011, news about MF Global had temporarily resurfaced, although the focus of attention seemed to be elsewhere.

A Reuters article by Luke Jeffs, datelined Tue NOV 29, 2011, noted that "European clearing house LCH.Clearnet . . . had moved all of its clients' positions with MF Global to new brokers." More than 300 open client positions were included in that transfer. Since the October 31 implosion, those positions had been frozen, and clients couldn't trade them.

In addition, as of November 29, all the client monies that the clearing firm had held during that time had reportedly been returned to MF Global's administrator, KPMG. A date of December 8 was set as the date at which clients could began the formal process to claim monies that were frozen at that time.

The article mentions that clients have been "increasingly frustrated" by the uncertainty over what had happened to their money. That's a mild term. I probably would have utilized "terrified," "stunned," and similar words.

You see, many are finding out for the first time that at least some of what was held in their accounts is not protected by SIPC or FDIC. As Jim Brown and others have explained, many of MF Global's clients traded futures or commodities. Traders expect either SIPC or FDIC insurance to kick in when brokerages fail, depending on whether funds are held at the brokerage or the excess margin swept elsewhere. Neither entity covers futures. For example, this SIPC page provides a concise description of what SIPC covers or doesn't cover. In a Reuters article datedlined Thu, Nov 24, Ann Saphir notes that the future industry had always claimed that walling off customer accounts from the fund's accounts offered safety, and no futures commission merchants had failed. The feeling in the industry was that an insurance fund analagous to SIPC coverage wasn't necessary.

However, a Mon Nov 28 Reuters article by Christopher Doering notes that when the Commodity Futures Trading Commission had attempted to employ the Dodd-Frank authority last year to more strictly limit the ability of futures commission merchants to invest clients' excess margin, many of those firms lobbied against the change. MF Global was one of those firms lobbying against the change, asking the CFTC to delay instituting it.

Several sources report that CME has offered a settlement to MF Global clients, meant to make up any shortfall of client funds, but some believe the amount offered to be far below the actual losses. Just as broker dealers contribute to the SIPC insurance funds, the contributions of Primary Clearing members finances this CME fund. Some question whether the CME's funds will be applied if the MF Global's clients' funds were deemed to have been lost due to fraud. Some market participants speculate that the futures industry will soon have an SIPC-type backstop to enhance clients' safety and ease the fears that have risen after the MF Global implosion.

I don't pretend to know all the ins and outs of these various agencies and certainly don't understand how the events at MF Global could have been allowed to transpire as they did. It shakes the foundation of faith we all need in our dealings with our own brokers, fairly or not. For me, it raised another question. Some brokerages require segregated futures trading and equities trading accounts: some blend them. I have monies in a brokerage that allows for a blending of the accounts, although I do not personally trade futures. I wondered, did the blending of abilities somehow undo the protections offered by either SIPC or FDIC? Is this account tagged differently?

Not according to the Trade Support representative I contacted. That question answered, I had another. What about the money swept into a money market deposit account overnight? That's covered by FDIC, my brokerage assures me. One caution, however. As I have noted in previous articles over the years, there are limits to the amounts that FDIC covers. If others of my monies happen to be deposited at the same institution to which my trading account funds are swept, and if the totals of the amounts held there exceed the FDIC limits, the excess funds over that limit would not be covered by FDIC, some sources say. I used to religiously check the institutions to which my funds were being swept to ensure that I also had no other accounts at those institutions, but my brokerage at the time seemed to change such institutions so regularly that it became hard to check, and FDIC limits were raised, too. I confess I got a bit lazy about it. I allow funds to be swept in only one small account.

I'm sure at least some of MF Global's clients asked questions and felt they'd gotten satisfactory answers, but it's possible that some had not. We all need to ask these questions of our brokerages, and then do whatever else is necessary to assure ourselves that we're depositing our money with reputable firms. We have seen the examples of fraud lately, and we know it exists. There may not be complete protection against them, no matter what efforts we've made, but we must make at least the rudimentary ones. Ask questions.

In my case, I've gone a step further. I will not put all our funds in any one institution. They're split up. Barring a complete financial failure of the financial system, we will survive even if one of those institutions fails and protections somehow don't kick in. We may not be happy, and our lifestyle will certainly suffer, but we'll survive. Is this being a Nervous Nellie, a Chicken Little? Probably. But that's okay with me.