There’s a ruckus going on Bell Potter between a senior dealer Jonathan Barrett and his head of retail stockbroking Dean Surkitt.

It’s not the biggest boilover in the world but it goes to show how zealous broking firms are about compliance in these turbulent times, and yes, it involves yet again another snafu by ANZ’s margin lending arm.

A copy of the following email from Barrett to his colleagues at Bells in Melbourne was leaked to BusinessDay:

From: Barrett, Jonathan

Sent: Monday, 15 August 2011 2:33 PM

To: -Advisers MEL

Subject: A Warning to all Advisers trading PA through ANZ Margin Lending

Last Tuesday I bought some stock through my ANZ Margin Lending Facility and forwarded more than sufficient funds to cover the trades the following day.

B/c of what ANZ describe as “systems issues”, they did not settle my trades on Friday.

Consequently there has been a breach of Market Integrity Rules, and Bell Potter has banned me from trading for one month.

I have asked Dean, that given this was ENTIRELY the fault of ANZ, what should we do to ensure this event is not repeated…. The response is to bring all PA margin trading in house to Bell Potter Capital.

I thought you’d appreciate the “heads-up” if you deal through ANZ.


So here we have a bungle by ANZ, whose margin lending track record (Opes Prime et al) is legendarily accident-prone, which results in a breach of market integrity rules by the stockbroker and is met with a zero-tolerance response by Bell’s management.

As it happens it could of course be good for business if more of Bells’ margin-borrowing business were brought in-house, boosting profit margins.

Times are tough, after all, with client trading volumes well down due to the sovereign debt crisis.

For his part, Barrett not only got banned from PA trading (personal account) for a month but the ban included withdrawing his ability to act in the face of impending or actual margin calls.

Things could get ugly if the market went the wrong way and the broker was forced to liquidate at market lows rather than top-up and enjoy the bounce. The Bell’s penalty is one month regardless of circumstances.


Anyway, Barrett’s warning email to the rest of the Melbourne adviser team saying that any bank IT issues involving their payments systems could also mean they faced similar bans, has caused something of an in-house uproar.

There are plenty of big traders at Bells and a month-long ban combined with adverse market movements could hurt. It’s hypothetical, mind you, but tempers get testy in troubled market times.

Surkitt would argue, with some reason, that the bar has to be set somewhere and it’s not Bell’s problem if third parties the likes of ANZ can’t settle.

ANZ was involved in various ways in the Storm Financial, Opes Prime, and stock lender Chimaera Capital too. The strong perception is that ANZ doesn’t have enough resources allocated to deal with the volumes which it services.

It must still be cheaper than the Bells’ in-house option though, or perhaps it has better LVRs.

With margin lending rates since the financial crisis at around twice the RBA cash rate all current margin lending customers are paying for the industry’s failure to price risk in the lead-up to the financial crisis.