MF Global Singapore Pte Ltd v Vintage Bullion DMCC [2015] SGHC 162

The Singapore High Court in MF Global Singapore Pte Ltd v Vintage Bullion DMCC considered a contention by customers of an insolvent brokerage firm that profits made from certain leveraged foreign exchange and leveraged commodity transactions with the firm were held on trust for the customers. The court disagreed. This meant that the customers can only stand as unsecured creditors over the profits. 


MF Global Singapore (“MFGS”) was a member and a clearing member of inter alia the Singapore Exchange Securities Trading Limited, the Singapore Exchange Derivatives Trading Limited and also held a Capital Markets Services Licence issued by the Monetary Authority of Singapore.

MFGS offered leveraged foreign exchange transactions (“LFX transactions”) and leveraged commodity transactions (“Bullion transactions”) in the ordinary course of business and Vintage Bullion DMCC (“Vintage”) conducted both types of transactions with MFGS.

MFGS recorded daily foreign exchange activity statements with regard to its customers, noting:

  • Unrealised Profits (or Losses): The value of the open position with reference to the market price of either the underlying currency or reference bullion.
  • Forward Value: The profit, if any, as a result of the closure of a position.
  • Ledger Balance Carried Forward: The customer’s running account with MFGS showing liquidation profit.

MFGS entered provisional liquidation and Vintage received payment of the sum of US$5,137,229.93 as part of the interim distribution made by the Liquidators. This sum included amounts attributable to the LFX and Bullion transactions, as well as amounts from other futures and options transactions. Vintage was of the view that it had been underpaid. It transpired that the parties took a different view of how the Unrealised Profits and Forward Value arising from the LFX and Bullion transactions should be treated as a matter of law.

Vintage was appointed to represent MFGS’s LFX and Bullion customers who had claims against MFGS for these forms of profits.  The Unrealised Profits and Forward Value in dispute amounted to about US$13.4 million for all the LFX and Bullion customers.

Issues before the court

Ultimately, the question was whether a trust had been created over the profits such that the LFX and Bullion customers had proprietary claims over the profits, or, if the customers would stand as unsecured creditors who could only look to a distribution of MFGS’s available assets on a pari passubasis in MFGS’ winding up. In this connection, the court analysed two main issues.

First, the court had to determine the nature of the Unrealised Profits, Forward Value and Ledger Balance Carried Forward. The court analysed whether each of these were a present, future or contingent debt.

Second, having consideration of the nature of the debts, the court analysed whether such debts were held on trust by MFGS for the customers. 

Nature of Unrealised Profits, Forward Value and Ledger Balance Carried Forward

The Liquidators contended that the Unrealised Profits and Forward Value were only uncrystallised contingent or future debts that were not yet due and payable at the time of MFGS’s winding up. 

In relation to the Unrealised Profits, the court noted that until a transaction was closed out, the unrealised profit (or loss) would fluctuate on a daily basis until a transaction was closed out. As such, until the transaction is closed out, the unrealised profit is not crystallized and is at most a contingent debt (contingent on the close out and the prices moving in the customers favour).

Once the transaction is closed out, the customer’s profit (or loss) is certain and quantified. However, under the terms of the Master Trading Agreement (MTA) that MFGS entered with its customers, MFGS was only obliged to pay the profit, i.e. the Forward Value, on the Value Date.  As such, until the Value Date arrives, the Forward Value is classified as a certain future debt.

When the Value Date arrives, the profits are due and payable to the customer and are reflected in the client’s account under the Ledge Balance Carried Forward as being available for withdrawal by the client. As this stage, the profit standing in the Ledger Balance Carried Forward is characterised as a certain present debt.

Was there a trust?

Vintage contended that MFGS intended to create a trust in favour of its LFX and Bullion customers in respect of the Unrealised Profits and Forward Value, notwithstanding that the evidence put forth by Vintage may show that MFGS intended to hold the moneys under the mistaken belief that it was required to do so under the applicable legislation.

The court found that the evidence put forward by Vintage did not prove that MFGS intended to create an express trust for the benefit of the LFX and Bullion customers regarding the Unrealised Profits and Forward Value. In fact, there were points which the court found contradicted Vintage’s supposition. For instance, MFGS commingled its own money with funds which Vintage alleged were held on trust for customers, and also commingled funds between customers. The court found that this went against a finding of an intention to create an express trust, which required the maintenance of a separate account with a prohibition against mixing of funds. The court also noted that it would not make commercial sense for MFGS to have satisfied the Forward Value, a future debt obligation, at an earlier date by creating a trust over its value.


Given the above findings, the court found in favour of the liquidators.