Feb 16

Noticable Drop in Margin Calls??? Derr

Perhaps I should read the article but I just saw the headline in today’s investor daily that margin calls have declined. I hope noone got paid to do a report on this phenomenon as I believe the fact that markets are at 10month highs really says it all.

I guess when you throw in the bad publicity margin loans got during the GFC, several providers pulled the pin and the remainders tightened their lending criteria I would have thought the only newsworthy item re:margin lending was if there actually was a margin call in recent times!

Anyway what I haven’t seen written about margin lending is the fact that the lenders are looking to shift the risks around this product to advisers. This is mostly due to the actions resulting from the Storm Financial debacle. One of the AFSLs I work under refused to sign the dealer group contract with the lender due to some inappropriate clauses. When we pointed them out to the lender their response was, “everyone else has signed up”. That doesn’t make it right and it’s not our fault other dealer groups don’t read their margin lending contracts or are prepared to take unnecessary risks.

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