KEY POINTS:
New Zealand investors with Australian broking firm Tricom Equity have not been affected by its failure to meet settlement deadlines on a number of share trades earlier this week, according to local head Bryn Griffiths.
The Sydney-based brokerage firm, which has offices in Auckland and Wellington, told the Australian stock exchange on Tuesday that it was unable to meet the deadline on certain trades made the previous week. The ASX has a 72-hour settlement deadline.
Tricom said its problems were caused by excessively large volume trades.
But yesterday the company said it was back on track and had met all its ASX obligations and settlement commitments. "Due to excessively large volumes of trades, settlement issues arose yesterday which were all resolved overnight. Tricom expects trading to continue as normal."
The company is thought to have been put under financial pressure by some private clients who were hit by margin calls during the stock market falls over the last couple of weeks.
Margin calls occur when stocks drop and the lender asks for the investor to provide more security for the loan they have taken out. Investors can be given 24 hours to come up with extra money.
Griffiths, Tricom's New Zealand chief operating officer, said all margin lending by its New Zealand investors was outsourced to the Australian business and none had been affected by the settlement issues.
The New Zealand business does not conduct margin trading on the NZX and is only an adviser. An NZX spokeswoman said it had been monitoring the situation in Australia and had maintained ongoing contact with the ASX on the matter of Tricom.
"NZX has required confirmation from Tricom New Zealand with respect to their clients' positions. Tricom New Zealand have informed NZX that they have only a handful of clients contracted directly with Australia for margin trading in equities," she said.
New Zealand brokers who deal with margin trades said they were surprised by Tricom's settlement problems. "If you are a broker you just don't do that - you settle," said ASB Securities head of sales Andrew Kelleher.
Forsyth Barr head of leveraged equities, Alan Nickson, said he would have expected the broker to have a facility with a bank where the bank would meet the settlement if it could not. But both said it was unlikely a similar situation would occur in New Zealand. "The margin market is just an awful lot smaller than Australia's. New Zealanders just seem to be more conservative," said Kelleher.
