Tricom Equities has reduced its margin loan book from about $2.5 billion at September 2007 to $1.5 billion last week and has been ordered by its lenders to reduce this portfolio to $1 billion by tomorrow
The Australian reported. Tricom's main creditors are ANZ, Merrill Lynch and Credit Suisse according to the newspaper.
The niche broking firm is, or was, an important source of margin loans and stock lending for a network of private clients that reportedly included plenty of executives and directors of niche financial services firms whose stock has been amongst the most volatile in the stock market since the turbulence in equities market related to the US sub-prime crisis took hold in the second half of last year.
Tricom on Tuesday failed to settle some off-market stock market trades on Tuesday, leading to a delay in settlement across the broking sector that day. The backwash of that episode delayed settlement for some time yesterday as well.
The Australian Securities Exchange yesterday morning advised market participants that Tricom met its financial obligations to ACH, the ASX's clearing house subsidiary on Tuesday.
The ASX noted that it was settlement instructions in relation to off-market, non-novated trades (and to which ACH was not a counterparty) that were at issue with Tricom on Tuesday. The Australian reported that these off-market trades related to securities lending.
The ASX said it required Tricom to provide a daily report "of its capital liquidity status", on-site regulatory oversight and independent oversight of Tricom's operational and financial control environment.