European clients of failed brokerage MF Global on Monday grew increasingly frustrated at the slow transfer to new brokers a week after filing for bankruptcy protection.

U.S. traders said temporary measures to relax collateral rules appeared to have diffused the threat of widespread liquidation. Most customers by Monday had regained access to their U.S. accounts with new brokers. But the process of untangling overseas accounts was moving more slowly.

They are still stuck, and no transfers are taking place. Our clients are waiting. It's very confusing. We don't know if the positions will be at the original prices or not, one oil broker in London told Reuters.

In Britain, administrators KPMG said 954,000 positions were open out of the 1.6 million positions in place when MF Global Holdings filed for bankruptcy protection on October 31.

ICE, meanwhile, canceled plans to auction off remaining contracts held by MF Global in Britain and smaller clients were heard to have trouble finding new brokers.

In U.S. markets on Monday, overall activity remained orderly despite worries that a rush to cover margin requirements could lead to heightened volatility. While corn and wheat saw some of the highest trade since August, activity in other markets was relatively muted.

The CME Group and IntercontinentalExchange both eased their clearinghouse rules to make it easier for many customers to meet the minimum margin after their accounts were transferred to new brokers last week with only about three-quarters of the collateral required.

Instead of being forced to replenish their escrow to meet the initial margin, traders instead only needed to meet the maintenance margin, which is anywhere from 25 to 40 percent lower. As a result, some customers had just enough capital to maintain their trades without raising more cash.

They're not necessarily adequately margined, but there's enough to cover the position, said Paul Pete Anderson, president of INTL FCStone, a leading independent broker.

But not everyone was so fortunate, and some customers struggled to raise the necessary cash by Monday's deadline.

One of the accounts has a margin call of $900,000 and this could be a problem. The person has to pay up as soon as possible and I doubt if he can come up with the money, a broker with MF Global told Reuters on condition of anonymity.

NEW MARGINS

MF Global customers who moved accounts to new brokers to post additional margins because some of the original funds were held back due to a court order.

The CME also asked brokers who have taken over customer accounts from MF Global to not disburse any of the money until at least the close of business on Tuesday as it sought to verify the amounts involved.

Trading volume in grains surged although activity in oil, metals and other commodities was lighter than normal.

As the transfers of some 17,000 accounts and $1.5 billion of collateral worked through the system, more complaints arose from customers and introducing brokers.

The transfers were awful, said Lou Illes, a managing member of McFarland Commodities LLC who cleared through MF Global. Accounts that should have gone to one place, went to another place

Other customers said that checks they received from MF Global just before its bankruptcy were bouncing.

ICE Futures Canada also temporarily lifted a requirement to charge an additional 35 percent margin to non-hedger clients of MF Global and said all accounts could be charged the hedger maintenance margin rate until further notice.

IN TALKS ON SALES

UK administrators said they were in talks about selling parts of the MF Global business in Britain.

(The) operation is not saleable as a total entity, but there are numerous discussions going on with various potential acquirers of part of the business, KPMG's Richard Heis said in an interview, declining to give further details.

KPMG said the $633 million in missing client assets -- whose disappearance derailed MF Global's efforts last week to quickly sell a variety of assets -- were unlikely to affect the winding down of the UK business.

(It) is a little hard to make that prediction, but (I have) no reason to believe at the moment that this is a UK problem, rather than a U.S. problem, Heis said.

KPMG said the entire foreign exchange portfolio in Europe had been unwound, consisting of 25,000 trades with a notional value of $60 billion.

The administrator also said it must reconcile client positions before it can start to distribute money to parties with a claim against MF Global.

(Additional reporting by Sam Nelson, Karl Plume and K.T. Arasu in Chicago; David Sheppard and Jeanine Prezioso in New York; Emma Farge, Christopher Johnson, Silvia Antonioli, Susan Thomas, Maytaal Angel and Luke Jeffs in London; and Antonita Devotta in Bangalore; Editing by Jane Baird and Marguerita Choy)

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