Commsec Says Sorry For China Syndrome

The Sunday Age

Sunday April 8, 2007

Christopher Webb

REMEMBER the meltdown of the China market about five weeks ago?

It seems like a distant memory now, what with the local market in virgin territory or thereabouts and the US market staging a steady recovery.

It might be recalled that the online efforts of some of the biggest bank-backed stockbrokers failed to adequately handle the traffic.

Some Westpac Securities clients lost control of their orders and some orders were not executed until one hour after they were placed.

Clients of CommSec, the biggest online broker in the country and owned by the Commonwealth Bank, had difficulties getting on to the site, while others, once logged on, were then quickly logged off.

The brokers concerned put the best spin they could on the problems but a recent note to CommSec clients apologised to those who had problems accessing the website. "Our website received over 17 million hits. . . that's nearly the population of Australia visiting CommSec in a day!" the broker's general manager, Matt Comyn, told clients.

"The vast majority of website hits were successful; however some clients did experience minor delays accessing the website in the morning.

"We'd like to apologise to those clients, and let you know we've taken action to prevent this from happening again," Comyn said.

He said that since the meltdown, CommSec had installed more servers to improve the capacity of the website to handle large trading volume spikes.

In the next few months the hugely profitable broking outfit is spending more than $1 million on new technology, and 20 per cent more staff have been put on the payroll in the client service centre.

Hopefully, Westpac has taken similar action.

Exchange stocks up on infringement notices

THE stock exchange has been busy handing out fines to a clutch of firms.

Just the other day the Australian Clearing House disciplinary tribunal fined RBC Securities Australia, an offshoot of the Royal Bank of Canada, $25,000 for failing to comply with risk-based capital requirements.

Last year the firm bought 3 million Coles Myer shares for a client for $40.3 million. The deal caused RBC's liquid capital to fall below its total risk requirement.

The tribunal thundered that failure to comply with the requirements had the potential to adversely affect the financial stability of participants, the financial security of clients and the integrity of the market.

Elsewhere, Ord Minnett was fined 35 grand.

Ord failed to maintain records in sufficient detail for share and option orders, and failed to maintain particulars of orders for at least three years.

The ASX disciplinary tribunal noted that the maintenance of proper orders served an important role, not only in protecting a participant in the event of a dispute, but also as part of the exchange's regulatory function.

Deutsche Securities copped a $45,000 fine for contravening two market rules.

The firm executed special crossings in derivative market contracts during the Toll Holdings' takeover for Patrick Corporation.

The tribunal said the contraventions did not appear to be intentional.

Elsewhere on the disciplinary front, Macquarie Airports was censured for disclosing 35,246 holder identification numbers and security reference numbers.

It turns out that the company engaged an agent to send out letters in window-faced envelopes to all security holders.

The numbers were visible through the windows of the envelopes.

Lucky that Australia's posties are an honest lot.

Ringing in prosperity

THE brothers Bell look to have had another successful year if the accounts of Bell Potter Securities are any guide.

Revenues of the firm, a large-scale subsidiary in the Bell empire, were up from $145 million to $174 million.

Pre-tax earnings were down from about $29 million to slightly more than $16 million.

But have a look at the moolah flowing the way of the company's heavies.

In calendar 2005, these folk collected $7 million but in the latest year compensation jumped just a little to a shade under $30 million.

Employee expenses were up from $97 million to $139 million. Directors included Colin, Lewis and Andrew Bell , while outsiders included Alistair Provan, Peter Burrows, Lionel McFadyen and Hugh Robertson.

© 2007 The Sunday Age

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