In a statement, ASIC said it had not been able to monitor the effect on the British banks and financial stocks after the UK ban on shorting was lifted on Friday.
In the first London trading session, shares in the major banks were punished, but it came at the same time as Royal Bank of Scotland recorded the largest loss ever in British corporate history.
“ASIC, however, noted the recent increase in volatility in financial stocks in overseas markets,’’ a statement from the Australian regulator said.
“ASIC is not at this stage in a position to assess if the resumption of short selling in the UK was coincidental or contributed to this volatility and if so, to what extent.
“As many factors are at play in these overseas markets, ASIC needs time to examine these latest developments.’’
The decision reverses the initial expectation that ASIC was keen to have the ban lifted on Tuesday.
However, The major decision makers at ASIC – chairman Tony D’Aloisio and commissioners Belinda Gibson and Jeremy Cooper – were understood to have been concerned about the risks to the financial system instability around the world at moment.
“ASIC will therefore, over the next few weeks, assess the markets more carefully to determine the role of short selling and aggressive or predatory practices and whether there are similar risks for Australia when the ban is lifted.
“ASIC believes that in the context of the renewed volatility affecting banking stocks in many markets, including the UK and USA, this cautious approach is warranted…that any possible loss of market efficiency or price discovery as a result of this additional short period of review is therefore justified, “ the statement said.
The following securities provides a complete list (as of the 14th November 2008) of the securities for which the ban on covered short selling will continue until at least 6th of March 2009
ABP Abacus Property Group
AMP AMP Ltd
ASX ASX Ltd
ALZ Australand Property Group
ANZ Australia & New Zealand Banking Group Lt
AUW Australian Wealth Management Ltd
AXA AXA Asia Pacific Holdings Ltd
BCM Babcock & Brown Capital Ltd
BJT Babcock & Brown Japan Property Trust
BNB Babcock & Brown Ltd
BOQ Bank of Queensland Ltd
BEN Bendigo and Adelaide Bank Ltd
BWP Bunnings Warehouse Property Trust
CER Centro Retail Group
CFX CFS Retail Property Trust
CGF Challenger Financial Services Group Ltd
CBA Commonwealth Bank of Australia
CPA Commonwealth Property Office Fund
DXS Dexus Property Group
FKP FKP Property Group
GMG Goodman Group
GPT GPT Group
HGG Henderson Group PLC
HFA HFA Holdings Ltd
IIF ING Industrial Fund
IOF ING Office Fund
IAG Insurance Australia Group Ltd
IFL IOOF Holdings Ltd
LLC Lend Lease Corp Ltd
MCW Macquarie CountryWide Trust
MDT Macquarie DDR Trust
MQG Macquarie Group Ltd
MOF Macquarie Office Trust
MGR Mirvac Group
NAB National Australia Bank Ltd
PPT Perpetual Ltd
PTM Platinum Asset Management Ltd
QBE QBE Insurance Group Ltd
SGB St George Bank Ltd
SGP Stockland
SUN Suncorp-Metway Ltd
SDG Sunland Group Ltd
TSO Tishman Speyer Office Fund
TAL Tower Australia Group Ltd
VPG Valad Property Group
WDC Westfield Group
WBC Westpac Banking Corp
Five additional Securities (being APRA regulated businesses)
WES Wesfarmers Limited
ROK The Rock Building Society Limited
WBB Wide Bay Australia Ltd
FCL Futuris Corporation Limited
CIX Calliden Group Limited
Wednesday, January 21, 2009
Wednesday, December 17, 2008
Trading non-approved margin loan securities
If you have a Leveraged Equities account and you want to buy non-approved securities in it (ie. stocks that LE will not lend over), you are able to do this with a zero-LVR. In other words the holding needs to be fully funded, and once purchased will not contribute to your leverage into other positions.
This can be useful if you want to margin your positions, but you don't want to split non-approved securities (eg. warrants) into another non-LE account.
Currently, Minc's systems will reject orders for non-approved securities, we're working on this to enable all securities (at zero LVR) - give us a week or so to sort this out. In the mean time, feel free to contact us to get a security manually added if you want to put a trade on in this circumstance. Call or email us at enquiries@thinkminc.com.au
This can be useful if you want to margin your positions, but you don't want to split non-approved securities (eg. warrants) into another non-LE account.
Currently, Minc's systems will reject orders for non-approved securities, we're working on this to enable all securities (at zero LVR) - give us a week or so to sort this out. In the mean time, feel free to contact us to get a security manually added if you want to put a trade on in this circumstance. Call or email us at enquiries@thinkminc.com.au
Cost base on CHESS transfers
Just a reminder that clients can request original cost base applied to their inbound CHESS transfers. This is useful if you've transferred stock in from another broker, and you want the original purchase price reflected in your profit/loss figures.
To do this, simply send us an email to enquiries@thinkminc.com.au with the account number & name, plus a list of the securities and the cost base (either cents per share or total dollar cost).
Preferably send this through before you start trading, but if you've missed that opportunity then send through the current total cost base (including trades done at Minc).
Keep in mind that IRESS/IOS uses average cost method when calculating ongoing cost base. That is, sales are applied against the average cost of purchase. If you want to do something more sophisticated in terms of optimising the realised/unrealised component (LIFO, FIFO, manual..) then stay tuned for some new tools in this area..
To do this, simply send us an email to enquiries@thinkminc.com.au with the account number & name, plus a list of the securities and the cost base (either cents per share or total dollar cost).
Preferably send this through before you start trading, but if you've missed that opportunity then send through the current total cost base (including trades done at Minc).
Keep in mind that IRESS/IOS uses average cost method when calculating ongoing cost base. That is, sales are applied against the average cost of purchase. If you want to do something more sophisticated in terms of optimising the realised/unrealised component (LIFO, FIFO, manual..) then stay tuned for some new tools in this area..
Monday, November 24, 2008
Resumption of short selling on the ASX
Beginning in September 2008, in response to developments in the domestic and international financial markets, the ASX and ASIC issued a number of publications in relation to the practice of short selling. An interim effect of those publications was to ban the practice of short selling (both “naked” and “covered” short sales) (with certain exceptions) for securities traded on the market operated by the ASX.
Effective 19 November 2008, ASIC lifted the ban on the practice of covered short selling, with the exception of short selling in what it described as “financial” securities. The ban on covered short selling of financial securities will continue until at least 27 January 2009; ASIC will advise whether this ban will continue or not. The ban on naked short selling remains in place until further notification from ASIC.
The following securities provides a complete list (as of the 14th November 2008) of the securities for which the ban on covered short selling will continue until at least 27 January 2009
ABP Abacus Property Group
AMP AMP Ltd
ASX ASX Ltd
ALZ Australand Property Group
ANZ Australia & New Zealand Banking Group Lt
AUW Australian Wealth Management Ltd
AXA AXA Asia Pacific Holdings Ltd
BCM Babcock & Brown Capital Ltd
BJT Babcock & Brown Japan Property Trust
BNB Babcock & Brown Ltd
BOQ Bank of Queensland Ltd
BEN Bendigo and Adelaide Bank Ltd
BWP Bunnings Warehouse Property Trust
CER Centro Retail Group
CFX CFS Retail Property Trust
CGF Challenger Financial Services Group Ltd
CBA Commonwealth Bank of Australia
CPA Commonwealth Property Office Fund
DXS Dexus Property Group
FKP FKP Property Group
GMG Goodman Group
GPT GPT Group
HGG Henderson Group PLC
HFA HFA Holdings Ltd
IIF ING Industrial Fund
IOF ING Office Fund
IAG Insurance Australia Group Ltd
IFL IOOF Holdings Ltd
LLC Lend Lease Corp Ltd
MCW Macquarie CountryWide Trust
MDT Macquarie DDR Trust
MQG Macquarie Group Ltd
MOF Macquarie Office Trust
MGR Mirvac Group
NAB National Australia Bank Ltd
PPT Perpetual Ltd
PTM Platinum Asset Management Ltd
QBE QBE Insurance Group Ltd
SGB St George Bank Ltd
SGP Stockland
SUN Suncorp-Metway Ltd
SDG Sunland Group Ltd
TSO Tishman Speyer Office Fund
TAL Tower Australia Group Ltd
VPG Valad Property Group
WDC Westfield Group
WBC Westpac Banking Corp
Five additional Securities (being APRA regulated businesses)
WES Wesfarmers Limited
ROK The Rock Building Society Limited
WBB Wide Bay Australia Ltd
FCL Futuris Corporation Limited
CIX Calliden Group Limited
Effective 19 November 2008, ASIC lifted the ban on the practice of covered short selling, with the exception of short selling in what it described as “financial” securities. The ban on covered short selling of financial securities will continue until at least 27 January 2009; ASIC will advise whether this ban will continue or not. The ban on naked short selling remains in place until further notification from ASIC.
The following securities provides a complete list (as of the 14th November 2008) of the securities for which the ban on covered short selling will continue until at least 27 January 2009
ABP Abacus Property Group
AMP AMP Ltd
ASX ASX Ltd
ALZ Australand Property Group
ANZ Australia & New Zealand Banking Group Lt
AUW Australian Wealth Management Ltd
AXA AXA Asia Pacific Holdings Ltd
BCM Babcock & Brown Capital Ltd
BJT Babcock & Brown Japan Property Trust
BNB Babcock & Brown Ltd
BOQ Bank of Queensland Ltd
BEN Bendigo and Adelaide Bank Ltd
BWP Bunnings Warehouse Property Trust
CER Centro Retail Group
CFX CFS Retail Property Trust
CGF Challenger Financial Services Group Ltd
CBA Commonwealth Bank of Australia
CPA Commonwealth Property Office Fund
DXS Dexus Property Group
FKP FKP Property Group
GMG Goodman Group
GPT GPT Group
HGG Henderson Group PLC
HFA HFA Holdings Ltd
IIF ING Industrial Fund
IOF ING Office Fund
IAG Insurance Australia Group Ltd
IFL IOOF Holdings Ltd
LLC Lend Lease Corp Ltd
MCW Macquarie CountryWide Trust
MDT Macquarie DDR Trust
MQG Macquarie Group Ltd
MOF Macquarie Office Trust
MGR Mirvac Group
NAB National Australia Bank Ltd
PPT Perpetual Ltd
PTM Platinum Asset Management Ltd
QBE QBE Insurance Group Ltd
SGB St George Bank Ltd
SGP Stockland
SUN Suncorp-Metway Ltd
SDG Sunland Group Ltd
TSO Tishman Speyer Office Fund
TAL Tower Australia Group Ltd
VPG Valad Property Group
WDC Westfield Group
WBC Westpac Banking Corp
Five additional Securities (being APRA regulated businesses)
WES Wesfarmers Limited
ROK The Rock Building Society Limited
WBB Wide Bay Australia Ltd
FCL Futuris Corporation Limited
CIX Calliden Group Limited
Tuesday, October 7, 2008
Opening an account for a super fund or family trust
When you are opening an account for a Super Fund or a Family Trust, you need to open the account in the name of the legal trustee of the fund or trust.
For example:
· If the Trustee of the Super Fund or the Trust is a Company, then the Company application form needs to be completed and the name of the fund or trust should be typed under the Account Designation section;
· If the Trustee/s of the Family Trust are one or two individuals, then the Individual/Joint application needs to be completed and the name of the Trust should be typed under the Account Designation section;
· As a Super Fund cannot be established with only one individual as Trustee, it would require two individuals as Trustees and the Individual/Joint application form needs to be completed in both names and the name of the Super Fund should be typed under the Account Designation section.
As well as providing details of the Trustees, new Anti Money Laundering laws require that you now need to advise who the beneficiaries of the Fund or Trust are. You will be asked to complete these details as you go through our online application process. These details will then appear on all forms which you need to print off to sign.
The AML laws also require clients to provide 100 point identification (original certified copies) of all applicants and fund or trust beneficiaries.
For example:
· If the Trustee of the Super Fund or the Trust is a Company, then the Company application form needs to be completed and the name of the fund or trust should be typed under the Account Designation section;
· If the Trustee/s of the Family Trust are one or two individuals, then the Individual/Joint application needs to be completed and the name of the Trust should be typed under the Account Designation section;
· As a Super Fund cannot be established with only one individual as Trustee, it would require two individuals as Trustees and the Individual/Joint application form needs to be completed in both names and the name of the Super Fund should be typed under the Account Designation section.
As well as providing details of the Trustees, new Anti Money Laundering laws require that you now need to advise who the beneficiaries of the Fund or Trust are. You will be asked to complete these details as you go through our online application process. These details will then appear on all forms which you need to print off to sign.
The AML laws also require clients to provide 100 point identification (original certified copies) of all applicants and fund or trust beneficiaries.
Monday, September 22, 2008
Order vetting on the ASX
The vetting of orders placed has often irritated clients both of a retail and institutional nature with incomprehensive and prolonged delays. Let’s drill down a little and find out why some orders are diverted to a human for review, you may be surprised by the reasons.
What is order vetting ?
Order vetting can be best described as a process whereby an order is intercepted and steered through a database of filters whereupon the order either succeeds or fails based on certain trading criteria. If the order passes it goes straight to market. If the order fails the filter review, it is then up to the operator to determine whether these orders can be released to the market or not. This can impede the speed in which order entry occurs as the order is appraised for its merits.
Your order breaches a filter : Ok how do brokers vet your straight through order (STP) ?
Typically your account will be allocated with a HIN which tells the broker what stock or how much money you hold.
If you try to sell more stock than you hold it will break a filter and will be denied. e.g. Placing an order to sell 1500 BHP shares when you only hold 1000 shares.
If you try to buy more stock than you hold in cash, the order will be diverted to a human and will be denied. e.g. Buy 1000 HVN shares at $3.60 which comes to $3600.00 plus commission but you only have $3500.00.
In some instances you may buy a large amount of stock and have the cash to buy it but find yourself being vetted (and delayed), why is that ? Well, some brokers may set a maximum $ order value ceiling on the ticket which diverts it to an operator for authorising. The reasoning behind this is that it may be a case of fat finger (incorrect data input (100,000 shares instead of 100 shares)) and the broker is protecting you by reviewing the order. There is some merit to this thinking and with some large orders it may be worth calling your broker and pre warning them of your intentions.
Untraded deletes is another filter that brokers use to stop traders from potentially manipulating activity in a stock. Simply put, it refers to the number of bids and offers that a user is allowed to delete from the market before an alert triggers. Once this limit has been reached you will need to seek permission from your broker before you can place a new order into the market. This may appear restrictive however to counter this, it is suggested the client amend their existing order/s as opposed to deleting and then re-entering them thus avoiding the untraded deletes quota.
Limit order if no market. If there is no market in your stock (i.e. no bid and offer/ no bid but an offer ; bid but no offer) and you wish to trade in that stock, the order will be diverted to an operator for vetting. The reasoning behind this is that since there is no price reference in that stock then caution must be taken to ensure a fair price is released to the market. This is to satisfy the ASX business rule of maintaining a fair and equitable market, thereby protecting the broker and the client against potentially paying too much if buying, or selling too low.
Concurrent bid/offer vetting. This occurs when you have exceeded a benchmark number of bids/offers in a particular stock and consequent orders are then filtered by an operator. In essence this is to prevent order stacking/layering of orders which can be viewed as manipulating the market for that stock. The reason is two-fold. By giving the impression there is more interest in that stock (due to greater depth), or enticing the rest of the market to bid above your orders (if stacking on the buy side) thus allowing you to sell your stock at a price higher than you otherwise could have without the laying of orders. You would then cancel your non-legitimate bids thereby completing the market manipulation exercise. The reverse is true if stacking on the sell side.
Ramping. This occurs when a comparatively small order in $ terms moves a particular stock by a certain % e.g. an order of $100 moves the stock up by 5%. These types of orders will be vetted by an operator who will determine whether any market breaches are taking place. This process also attempts to prevent “marking the close” whereby traders attempt to influence the closing price of a particular stock at comparatively little outlay to them in an effort to improve their portfolio valuations. This not only takes place on a retail level but typically happens at the end of the month or quarter when some unscrupulous fund managers wish for some of the stocks in their funds to reflect better closing prices for the preferred period.
The order Price Range Limit is probably the filter which is most often tripped unnecessarily. The main reason for this occurring is probably down to the broker not applying the appropriate range of filters on orders (and by that we mean the price) being placed during the open, pre-open and pre-cspa (closing single price auction).
Put simply, if an identical percentage and an identical price step filter using the last, bid/offer as a reference price is applied unilaterally on all price ranges (and hence all stocks) with the purpose of vetting all orders, you can be assured that a stock priced in cents (such as SDL.AX) should be vetted in a different manner to one which is priced in hundreds of dollars (RIO.AX).
How does this really work ? The price steps for a stock in quoted in cents should probably be in the range of 2 to 10 price steps, however in the instance of a stock being quoted in the $5 – $150 range anything from 20 to 250 price steps would be acceptable. Much the same logic applies to a percentile filter being applied to the last, bid/offer on a stock quoted in cents and a stock valued in (multiple) dollars.
The challenge for the broker is what filters to apply on what ranges and whether to include price steps or movements in % terms or a combination of both.
It should be noted that in the pre-open and pre-cspa (pre market) the price steps and the percentage filters are usually dramatically increased (doubled or tripled) by your broker to allow your orders to participate without unnecessary vetting (at least they should be).
This is because of the huge price overlaps that can be witnessed during pre-market opening phases. You may find, for instance, that to fill a BHP order on the open, you will need to bid way over what the auction price is to obtain priority in the queue e.g. BHP match price may be $38.80 however the highest bid prior to the market opening may be $46.00.
Unfortunately filters cannot always gauge what the correct parameters should be to compensate for these overlapping prices and hence the investor may find their order is directed to an operator for review prior to being released to the market.
Some brokers also use the Price Range Limit filter for another purpose, ensuring that orders are not placed too far from market. For instance if your intention is to join the bid / offer deep in the queue with little chance of trading that day but with the hope of the market going your way over time, it may actually trip a ‘too far away from market’ filter. This may be the result of a typo where for instance let’s assume you are placing an order to buy 100 RIO.AX shares at $106.50 but you accidentally type $10.65. This order should trigger an alert and your broker will probably reject the order or call you direct to alert you of the typo.
Traders think Minc
What is order vetting ?
Order vetting can be best described as a process whereby an order is intercepted and steered through a database of filters whereupon the order either succeeds or fails based on certain trading criteria. If the order passes it goes straight to market. If the order fails the filter review, it is then up to the operator to determine whether these orders can be released to the market or not. This can impede the speed in which order entry occurs as the order is appraised for its merits.
Your order breaches a filter : Ok how do brokers vet your straight through order (STP) ?
Typically your account will be allocated with a HIN which tells the broker what stock or how much money you hold.
If you try to sell more stock than you hold it will break a filter and will be denied. e.g. Placing an order to sell 1500 BHP shares when you only hold 1000 shares.
If you try to buy more stock than you hold in cash, the order will be diverted to a human and will be denied. e.g. Buy 1000 HVN shares at $3.60 which comes to $3600.00 plus commission but you only have $3500.00.
In some instances you may buy a large amount of stock and have the cash to buy it but find yourself being vetted (and delayed), why is that ? Well, some brokers may set a maximum $ order value ceiling on the ticket which diverts it to an operator for authorising. The reasoning behind this is that it may be a case of fat finger (incorrect data input (100,000 shares instead of 100 shares)) and the broker is protecting you by reviewing the order. There is some merit to this thinking and with some large orders it may be worth calling your broker and pre warning them of your intentions.
Untraded deletes is another filter that brokers use to stop traders from potentially manipulating activity in a stock. Simply put, it refers to the number of bids and offers that a user is allowed to delete from the market before an alert triggers. Once this limit has been reached you will need to seek permission from your broker before you can place a new order into the market. This may appear restrictive however to counter this, it is suggested the client amend their existing order/s as opposed to deleting and then re-entering them thus avoiding the untraded deletes quota.
Limit order if no market. If there is no market in your stock (i.e. no bid and offer/ no bid but an offer ; bid but no offer) and you wish to trade in that stock, the order will be diverted to an operator for vetting. The reasoning behind this is that since there is no price reference in that stock then caution must be taken to ensure a fair price is released to the market. This is to satisfy the ASX business rule of maintaining a fair and equitable market, thereby protecting the broker and the client against potentially paying too much if buying, or selling too low.
Concurrent bid/offer vetting. This occurs when you have exceeded a benchmark number of bids/offers in a particular stock and consequent orders are then filtered by an operator. In essence this is to prevent order stacking/layering of orders which can be viewed as manipulating the market for that stock. The reason is two-fold. By giving the impression there is more interest in that stock (due to greater depth), or enticing the rest of the market to bid above your orders (if stacking on the buy side) thus allowing you to sell your stock at a price higher than you otherwise could have without the laying of orders. You would then cancel your non-legitimate bids thereby completing the market manipulation exercise. The reverse is true if stacking on the sell side.
Ramping. This occurs when a comparatively small order in $ terms moves a particular stock by a certain % e.g. an order of $100 moves the stock up by 5%. These types of orders will be vetted by an operator who will determine whether any market breaches are taking place. This process also attempts to prevent “marking the close” whereby traders attempt to influence the closing price of a particular stock at comparatively little outlay to them in an effort to improve their portfolio valuations. This not only takes place on a retail level but typically happens at the end of the month or quarter when some unscrupulous fund managers wish for some of the stocks in their funds to reflect better closing prices for the preferred period.
The order Price Range Limit is probably the filter which is most often tripped unnecessarily. The main reason for this occurring is probably down to the broker not applying the appropriate range of filters on orders (and by that we mean the price) being placed during the open, pre-open and pre-cspa (closing single price auction).
Put simply, if an identical percentage and an identical price step filter using the last, bid/offer as a reference price is applied unilaterally on all price ranges (and hence all stocks) with the purpose of vetting all orders, you can be assured that a stock priced in cents (such as SDL.AX) should be vetted in a different manner to one which is priced in hundreds of dollars (RIO.AX).
How does this really work ? The price steps for a stock in quoted in cents should probably be in the range of 2 to 10 price steps, however in the instance of a stock being quoted in the $5 – $150 range anything from 20 to 250 price steps would be acceptable. Much the same logic applies to a percentile filter being applied to the last, bid/offer on a stock quoted in cents and a stock valued in (multiple) dollars.
The challenge for the broker is what filters to apply on what ranges and whether to include price steps or movements in % terms or a combination of both.
It should be noted that in the pre-open and pre-cspa (pre market) the price steps and the percentage filters are usually dramatically increased (doubled or tripled) by your broker to allow your orders to participate without unnecessary vetting (at least they should be).
This is because of the huge price overlaps that can be witnessed during pre-market opening phases. You may find, for instance, that to fill a BHP order on the open, you will need to bid way over what the auction price is to obtain priority in the queue e.g. BHP match price may be $38.80 however the highest bid prior to the market opening may be $46.00.
Unfortunately filters cannot always gauge what the correct parameters should be to compensate for these overlapping prices and hence the investor may find their order is directed to an operator for review prior to being released to the market.
Some brokers also use the Price Range Limit filter for another purpose, ensuring that orders are not placed too far from market. For instance if your intention is to join the bid / offer deep in the queue with little chance of trading that day but with the hope of the market going your way over time, it may actually trip a ‘too far away from market’ filter. This may be the result of a typo where for instance let’s assume you are placing an order to buy 100 RIO.AX shares at $106.50 but you accidentally type $10.65. This order should trigger an alert and your broker will probably reject the order or call you direct to alert you of the typo.
Traders think Minc
Sunday, September 21, 2008
Shorting update
A lot of discussion taking place on shorting given the truly bizzare movements over the weekend, with lots of people asking question.. what the hell?
All forms of short selling have been banned:
Note that clients of Minc Online are not directly impacted by these changes. Since client holding are registered on CHESS and sponsored by Minc as broker, there is no risk of naked short selling. Of course clients now have the legal obligation to ensure they do not sell any stock that is transferred to Minc as a result of borrowing from another party.
All forms of short selling have been banned:
- Covered shorting: selling stock you have borrowed from someone else. They'll want a fee to allow you to do this, and you need to return the stock when they want it back.
- Naked shorting: selling stock you, well, don't have. Many in this category just cop the fail fees instead of bothering to borrow the stock. These go into the coffers of exchanges.
- Market makers
- Exchange traded options, warrants and exchange traded funds.
Note that clients of Minc Online are not directly impacted by these changes. Since client holding are registered on CHESS and sponsored by Minc as broker, there is no risk of naked short selling. Of course clients now have the legal obligation to ensure they do not sell any stock that is transferred to Minc as a result of borrowing from another party.
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