Refco is a "trading firm" that deals with futures, derivatives and commodities - mostly areas that were allowed to emerge since the rise of neo-liberalism, with the precise intent of bypassing regulations and limiting taxation. It is extremely "leveraged" (strictly speaking some of this isn't leverage but rather "trust" and other unsecured access to funds, but the result will be the same -- probable near liquidation).
As of this morning, the official line is that there is little "systemic risk" (i.e. affecting the industry as a whole) because their type of business is dispersed world-wide and in a very liquid business. But as in all such cases, this is only true to the degree that people believe it. Stay tuned.
That leaves there more direct hits. Refco went public only last year. The papers say that their underwriters were Goldman Sachs and Credit Suisse Boston, so they will be taking a big hit. Apparently a big buyout firm (Thomas H. Lee) also bought more than half of their stock and they have bankers (apparently, BoA, Deutsche Bank and CS Boston). And of course there are the individual parties who held their bonds, or somehow got caught in the middle of a trade, or didn't get the money out of their trading account in time. And soon there will be the lawsuits against everyone who vouched for or invested funds from a publicly-held company in Refco.
Paul