Category: Investment

Margin lending calls up, Number of investors down

Investors aboard the borrow to invest, get rich quick trainare finally jumping off, or more to the point falling off, with the number of open margin lending accounts declining in the September quarter, for the first time since the Reserve Bank of Australia (RBA) began publishing margin lending data in 2000.

Open margin lending accounts fell 2 per cent to 202,200, as investors with leveraging in mind are not just sitting on the sidelines waiting to re-enter, but totally exiting the market by closing accounts.

Client account growth had been rapid in recent years, increasing 5 per cent in the year to September 2008, 26 per cent in the last two years and 44 per cent in the last three.

The aggregate credit limit declined by 4 per cent to $71 billion, as expected due to account closures, but also indicating those margin lenders remaining in the market are not increasing lending limits.

Margin calls of 4.32 per day per 1,000 clients in the September quarter were over double the 1.75 the June quarter, and four times the 1.04 in the corresponding period a year before.

The full story at Financial Services Review

Financial literacy program for school kids

ASIC has launched a new financial literacy program Your Money Starter- Insurance and Super designed to assist young Australians in making decisions about insurance and superannuation.

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It is a resource for secondary schools in each state and territory and is currently being distributed to every high school in the country.

“Young Australians who understand insurance as a way to protect their assets and superannuation as an effective way to save for retirement will get a head start on two key areas of personal finance”, Superannuation and Corporate Law Minister Nick Sherry said

“Your Money Starter includes a variety of innovative classroom materials, activities and multimedia elements designed to make learning about financial services relevant and attractive to teenagers,” ASIC chair Tony D’Aloisio said.

The materials are available in hard copy and on CD-ROM and can be downloaded, free of charge, from ASIC’s consumer website, FIDO, at www.fido.gov.au/yourmoneystarter.

Short selling draft laws and ASIC interim rules released

The Minister for Superannuation and Corporate Law, Senator Sherry, has released  draft legislation on the disclosure of covered short sale transactions. Senator Sherry said the Corporations Amendment (Short Selling) Bill has been released in preparation for the possible future removal of the current halt on most types of covered short selling put in place by regulators from 22 September 2008.

Senator Sherry said the draft legislation addresses ambiguity around covered short selling and requires the disclosure of transactions where a seller has entered into a securities lending arrangement to cover a sale.

In particular, covered short sales would have to be disclosed by sellers to a financial services licensee who in turn would be required to disclose the position to the market operator.

Submissions are due by 21 October 2008 and can be sent to: Manager, Market Integrity Unit, Corporations and Financial Services Division, The Treasury, Langton Crescent, Parkes ACT 2600 – or email shortsellingbill@treasury.gov.au.

ASIC has also advised that it has reviewed the operation of the market since its announcements and had opportunity to consult with ASX and industry. ASIC has now issued an advisory which summarises its position regarding the prohibition of naked and covered short selling including permitted exceptions which are in line with overseas developments.

ASIC states that where covered short selling is permitted, the short selling transaction needs to be disclosed in accordance with ASIC Class Order [CO 08/751].

ASIC also notes that the exemptions may change. Accordingly, ASIC will monitor the market to ensure there is no misuse of the exemptions.

Source: Minister for Superannuation and Corporate Law media release No 057, 23 September 2008 ASIC advisory AD 08-22, 23 September 2008