March 17 (Bloomberg) -- MF Global Ltd., the largest broker of exchange-traded futures and options, fell 65 percent in New York trading on speculation clients were withdrawing cash. The company said its funding was ``sufficient.''

``There are concerns that their commodities prime brokerage group customers are pulling money out,'' said Michael Nasto, senior trader at U.S. Global Investors Inc., which manages $5 billion in San Antonio. ``The customers have concerns about the financial stability of the firm.''

MF Global had $10.4 billion of customer segregated funds as of Jan. 31, according to the U.S. Commodity Futures Trading Commission. The Hamilton, Bermuda-based company fell $11.30 to $6.05 at 4:30 p.m. in New York Stock Exchange composite trading, after falling as low as $3.64 earlier today while financial shares dropped to the lowest level in almost five years. MF Global stock has lost 81 percent of its value this year.

``We currently have sufficient funding to conduct our business in the normal course,'' the company said in a statement. ``In the event that these funding sources change we have additional, alternative sources to fund our business.'' MF said it has $1.4 billion in untapped credit and doesn't face losses on subprime mortgage-backed securities.

``MF Global understands the significant concerns across the markets,'' the company said in its statement. ``Our clients continue to show strong support and our counterparty relationships are sound.''

Trading Loss

Joseph Lewis, the billionaire investor whose Bear Stearns Cos. shares have plummeted, is not an MF Global client, the company said in its statement. Market rumors linked Lewis and MF Global as the broker's shares began to drop today. Lewis's 9.4 percent stake in Bear Stearns lost $1.16 billion of its value after the securities firm's sale to JPMorgan Chase & Co. yesterday for $240 million.

MF Global dropped 45 percent in two days last month after one of the company's traders lost $141.5 million on what the company said were unauthorized wheat futures trades. The plunge today came after Bear Stearns agreed to be acquired by JPMorgan Chase $2 a share because a cash shortage threatened to bankrupt the company.

Other brokers also declined today. Interactive Brokers Group Inc., the securities firm that handles about a fifth of options bought and sold in the U.S., fell 15 percent. New York-based derivatives broker GFI Group Inc. fell 47 percent.

Man Group

MF Global is the former brokerage unit of Man Group Plc, the world's largest publicly traded hedge-fund manager. The firm, which has its operational headquarters in New York, earns fees executing trades and acting as a clearinghouse by processing transactions to ensure the delivery of contracts.

``Small clearing firms are definitely vulnerable if there's a run on the bank,'' said Marc Weinberger, head trader at W. Quillen Securities in New York. ``The reality is large clients are pulling money from smaller firms.''

Man Group built up the brokerage unit by acquiring assets from Refco Inc. when the New York-based futures broker went bankrupt in 2005. MF Global sold shares to the public in July.

To contact the reporter on this story: Matthew Leising in New York at mleising@bloomberg.net; Jeff Kearns in New York at jkearns3@bloomberg.net.

Last Updated: March 17, 2008 16:42 EDT