The Australian Securities & Investments Commission has taken its crackdown on misleading ads for financial products and services one step further by issuing a guide that strives to restrict the language of financial planners.

Guidelines prepared by Peter Kell, an ASIC commissioner focus on promoters highlighting the risk element of financial products to consumers so that they are aware of the high risk of financial trading.

‘Ads that do not accurately represent the financial product or its key features and risks, or the nature and scope of financial advice, can create unrealistic expectations that lead to poor financial decisions,’ he said.

Kell noted that the Australian Securities & Investments Commission has already been successful in eliminating a few of the ‘bad apples of poor products’ from the financial industry, with almost 120 adverts banned or changed since July 2010.

However, he emphasised that in future penalties will be harsher for adverts that the Australian Securities & Investments Commission didn’t perceive to be transparent, accurate or balanced.

‘The outcomes we will aim for when confronted with suspected breaches will involve potentially stronger penalties than we have sought in the past,’ said Kell. The 47-page guide includes 38 examples of such adverts and follows on from a consultation issued by ASIC last year.

Those found guilty will face fines, injunctions, public warning notices and in severe cases jail sentences under new guidelines published by ASIC. ASIC enforcers will also ensure that advertising catch words like ‘guaranteed’, ‘secured’, ‘stress free’, ‘low rosl’, and ‘protected’ are used in a proper context.

The guidelines in particular state that:

‘Information about the risks of a financial product should be clear, and not hidden or difficult to understand, and should be given sufficient prominence to information about returns and benefits. The tone of the advertisement should not undermine the importance of the risks.’

The guidelines cover superannuation products as well as insurance policies and CFDs. ASIC referred to CFDs as risky financial products that can expose investors to large losses and ads shouldn’t allude to the contrary.

‘Build personal wealth with low-risk trading strategies’ or ‘Safely harness the leverage power of CFDs’ were phrases singled out by ASIC as examples of misleading ads that didn’t properly reflect the risks involved in trading in CFDs.

Kell stated that the Australian Securities & Investments Commission would be looking more closely at ads that target vulnerable retirees and would also look at clamping down on the online and mobile environment.

‘These continue to be growth areas for the promotion of finance advice and services,’ said Kell, who added they have already taken action against a number of online promoters.

“But we would prefer to see them get it right the first time,” he said.

IG Markets has launched a new platform designed to help traders research markets events and analyse data. The new research software application which IG has dubbed as the new Insight platform is a centralised platform encompassing market data, live news and expert analysis on the financial markets.

With Insight you can:

• Access the economic calendar to track global financial events
• View client sentiment indicators, for a summary of IG clients’ positions
• See live Reuters news, filtered by market or region
• Get expert opinion on news, events and market movements
• Track and analyse historic data with our versatile in-page charts package

Insight is customisable and linked to IG’s web dealing platform, with dealing functions ranging from watchlists to working orders embedded in you analysis, including instant charts, streaming news from Thomson Reuters, corporate fundamentals and more.

Insight provides clients with a perspective on the most traded markets at IG, in particular how many people are long or short of a specific instrument and what other markets they have dealt.

This is because the application is designed to release details of IG’s clients’ net aggregate positions allowing better collaboration amongst traders. All data is anonymous and individual trades are not reported, but clients can check the percentage of long or short trades, other trades held by clients trading a particular market, the most popular markets overall, and more.

David Jones of IG Index stated that clients have been grabbed by aggregate trade data: ‘Clearly this can be used to gauge the sentiment of fellow traders and decide whether you want to join them – or if they are all barking up the wrong tree and you want to use it as a contrary indicator.’

We are told that with Insight you can also deal directly from any market page or chart. Christopher Beauchamp of IG Index believes ‘increased information about how other traders are positioned will also develop.’ He says traditional bulletin boards have provided traders with a place to share their thoughts and views (with the usual caveats about bias), but there are new ways of learning from others.

To access Insight, just log onto your IG Markets account and click the ‘Insight’ button.

After a few forays in Australia as a financier and platform provider for failed trading houses like Tricom and Sonray, Danish bank Saxo has decided to ramp up its business in Australia and has now opened a direct office in Sydney.

On January 30th Saxo Capital Markets announced the launch of its retail division in Australia offering Australian investors and traders the opportunity to trade numerous asset classes across award-winning online trading platforms.

Saxo Capital Markets (Australia) Pty Ltd is a wholly-owned subsidiary of Saxo Bank A/S. It holds an Australian Financial Services Licence 280372 and is regulated by the Australian Securities & Investments Commission.

We are told that Saxo Capital Markets (Australia) Pty Ltd will offer traders sophisticated trading platforms such as SaxoTrader and SaxoWebTrader, permitting the trading of foreign exchange, CFDs and stocks with live streaming prices and fast execution.

In a media statement released yesterday, the bank which has headquarters in Denmark announced the launch of its Australian operation. The company provides clients with access to over 160 foreign exchange crosses, more than 13,000 shares from 25 major exchanges and some140 Futures contracts from over 19 exchanges.

SCM Australia’s CEO Anthony Griffin commented “In Australia, we will be adopting the standard Saxo business model that has been successfully implemented in over 20 countries and bringing our award-winning platforms to the market.” He believes that the company has the services and competitive offering to transform the online trading market in Australia.

In the media release, SCM said that it had recently completed the acquisition of Logos Commodities Pty Ltd, the holding company of Commodity Broking Services Pty Ltd.

Saxo Bank was founded in 1992. Saxo Bank’s trading platforms have defined the company’s success in the online trading space for over 10 years. Since launching the SaxoTrader in 1998, Saxo Bank has improved its platforms to meet the ever-evolving needs of traders and investors in a continuously changing industry. The Group has expanded overseas since 2006 and now has operations in more than 20 countries including major financial centres such as Tokyo, Singapore, Hong Kong, London, Zurich, Dubai, and Paris.

Editor Comment: This is all well but Saxo Bank is not exactly cheap for dealing in CFDs; just yesterday I received notification of additional revisions in their financing and margin rates!

As from January 2012 Dutch listed companies are obliged to notify the market for substantial shareholdings including cash-settled financial instruments which have a similar economic effect to holdings of shares. In particular, the Dutch government now imposes the obligation for parties to aggregate holdings of CFDs and other financial instruments with a similar economic effect (such as cash-settled options and total return equity swaps) with holdings of listed stocks and other financial instruments included under the present Dutch disclosure and transparency regulation. The new rule also impacts persons who have sold put options on stocks in listed companies.

The new rules follow a consultation by the Ministry of Finance back in September 2009 and come into effect in the Netherlands in advance of an expected change of the Transparency Directive (2004/109/EC) to the same effect.

The Netherlands Financial Authority has published a policy rule in respect to the new notification rules. This memorandum briefly describes the background of the new rules, the scope of the (amended) substantial shareholdings disclosure regime, the AFM’s policy rule and finally, the so-called initial notification requirement (under which notification may be required within four weeks following 1 January 2012).

The new rules stipulate that a person will be considered to possess stock in a relevant listed company if an investor:

• holds an instrument of which the rise in value depends, in whole or in part, on the rise in value of stock or related distributions, and which does not grant a direct right to settle in stock (for instance contracts for difference and total return equity swaps);
• may be obliged to purchase stock as a result of having sold a put option; or
• has effected another contract with a similar economic effect to holding shares.

From 1 January 2012 onwards market participants are obliged to aggregate their holdings in companies through conventional financial instruments such as shares and physically settled call options, convertible bonds and warrants with the above mentioned instruments, which would encompass cash settled options, CFDs as well as total return equity swaps.

The new aggregation obligation compliments the current framework for disclosure of substantial shareholdings in the Dutch Financial Supervision Act.  This implies that holders of stock and/or votes (and of derivative instruments that either result in an entitlement to purchase the same or are cash settled instruments or put options as references above) in a Dutch public firm that happens to be listed on a regulated exchange  in the European Economic Area (“EEA”) (a “Dutch Listed Company”) are obliged to disclose the aggregated total of such holdings to the AFM if this total exceeds 5% of the issued share capital and/or the voting rights attached to the issued share capital of the Dutch Listed Company (the other applicable disclosure thresholds follow those of the European Union Transparency Directive). The same applies to holders of shares and/or votes (and of relevant derivative instruments, as described above) in a non-Dutch issuer with its corporate seat outside the EEA that is listed on a regulated market in the Netherlands (a “Non Dutch Listed Company”). A bill has been submitted to Dutch parliament which, once enacted, would lower the initial disclosure threshold to 3%.

Long and short trades in respective financial instruments may under certain situations be netted, however short positions resulting from an open sale of call options cannot be taken into account to offset corresponding long positions.

In the context of public bids, the Public Offers Decree (Besluit openbare biedingen Wft, the “Decree”) sets out for the disclosure to the Netherlands Authority for the Financial Markets of “contracts that relate to transactions in securities that a public offer relates to” by the offeror after it has publicly announced its intention to launch an offer for the target company. Moreover, the Decree obliged the offering party and the target firm to make public disclosure announcements of the same agreements (as referred to above) entered into by either of them in the time between the launch of the offer and the date at which a statement is made about the fulfillment of the offer. It could be argued that contracts for differences and other derivative financial instruments resulting in a mere financial stake in the target company is included within the scope of these reporting requirements. However, this does not appear from the explanatory notes to the Decree and is also not market practice. Please note that cash settled instruments should not be taken into account when determining whether or not a mandatory bid needs to be made (30% of the voting rights).

The methodology for working out  the number of underlying stock will be based on a delta adjusted method.  The delta of a stock derivative represents how the change in price of the derivative coincides to the change in price of the underlying stock. If the value of a derivative mirrors a change in the underlying stock price, then the delta is 1 (full correlation). Until 30 September 2012, positions may also be declared on the basis of the nominal number of underlying stock, in which case another document should be filed with the Netherlands Authority for the Financial Markets containing at least the exercise price, the nominal number of underlying stock and all such other information the market participant considers needed to enhance transparency.

The Netherlands Authority for the Financial Markets has also clarified the issue on whether economic stakes in listed companies held via indices or other baskets of stock are subject to the notification duty. The Netherlands Authority for the Financial Markets stipulates that a derivative in relation to a basket or index will be subject to disclosure only (subject to crossing any disclosure thresholds) if the respective securities make up 1% or more of the class in issue and/or 20% or over of the value of the stock in the basket or index. If a market participant (investor) has an interest in more than one basket or index (including the same underlying stock), then the interests do not need to be added if they are each below the 1% or 20% threshold as described, unless this is constitutes part of investment mechanism to avoid the disclosure duties.

China is reportedly preparing measures to boost the country’s emerging short-selling industry in an attempt to bring more liquidity to its capital markets, according to securities officials and several fund managers. In particular, Beijing is thought to be preparing a new body to help develop the country’s hedge fund industry. The new body which has been given the name of Centralised Securities Lending Exchange which purpose will be to make short selling easier may be launched as early as this March. The China Securities Regulatory Commission which is in effect the market regulator will be the biggest shareholder in the board with other shareholders being the Shanghai and Shenzhen stock exchanges, in addition to brokerage firms and some other financial institutions. At present it is not known exactly which companies will be involved, however, in early 2010 just 6 companies had licenses to trade in securities lending and margin financing. By the end of that year, 25 brokerages had licences to provide a wider range of prime services.

The exchange intends to seek stock from institutional holders like banks, insurance companies and fund management companies in China and make them available to fund managers who want to borrow them for a charge. Short sellers typically stand to make money by borrowing stocks and then selling them in expectation that the price would decline, permitting them to buy back the stock at a lower price and in this way make a profit. So while in some countries, authorities have been looking at curbing short selling on the basis that it can exacerbate volatility and bring certain industries in jeopardy, China is trying its best to bolster the activity to improve liquidity. Proponents of short selling argue that the practice not only boosts liquidity but also provides some income for shareholders who are prepared to lend their stock.

Raymond So Wai-man, dean of the School of Business at Hang Seng Management College was quoted saying that short selling is normally not the only reason behind a market’s fall so it is not a sensible decision to avoid it. He said allowing short selling is a must for the development of China’s capital market and will also serve to discourage the black market.

China’s hedge fund industry emerged in 2010 when the government started permitting index futures, short-selling and margin-trading, allowing institutions to offer such financial instruments; however the activity was hindered by the limited number of stocks available for qualified asset managers to borrow (at present just 285 stocks are permitted to be traded on margin). At the moment, short selling and margin trading accounts for only about 1% of daily deals on the Shanghai and Shenzhen bourses. Recently, Beijing formalised its margin-trading and short-selling system, which was originally introduces as a pilot project, and permitted more institutions to participate. China presently doesn’t permit naked short-selling, meaning such contracts must be based on collateral using shares or other securities.

IG Group Holdings plc has issued a trading update relating to the six months ended 30 November 2011. It appears that market volatility keeps working in IG Group’s favour. In its pre-close trading update the group now expect revenues to rise 25% year on year to £195.6 million (compared to previous guidance of a 23% increase). IG Index closed its sports division earlier this year to focus on its financial division and, excluding this operation, like-for-like sales were actually up 28%.

IG provides spread betting and contract for difference (CFD) services via its IG Index and IG Markets brands on a global basis. As markets swung wildly over the summer, day traders hoping for a quick punt signed up to the company, leading IG to report record numbers during the month of August, the same month that saw the FTSE dropping more than 7%. However, volatility has eased since then, which is to be expected although it remained higher than in the previous year.

UK revenues increased 23% to £102.1million (£82.9 million in first half of the prior financial year), but the largest area of growth was from its Australian and other ‘rest of the world’ divisions comprising Singapore, the US and South Africa, which rose 43% and 54% (£14.5m) respectively. The revenue growth was driven mainly by a 15% rise in active clients and an 11% increase in revenue per customer. The Group’s European offices achieved revenue of £37.8m compared to £26.7m in the prior year. Growth rates for the established offices were Germany: 46%, Italy: 40%, Iberia: 36%, and France: 31%. The Group’s most recently established European trading offices in Sweden and the Netherlands are at very early stages, but have contributed £1.8m of revenue compared to £0.7m in the corresponding period of the prior year. The Group’s US regulated exchange – NADEX continues to achieve steady recruitment of direct retail clients.

Japan which introduced leverage restrictions remains a thorn in IG’s backside with revenues down by 25% to £8.4m, active clients down 8% and revenues per client falling 53%. Further growth should come from IG’s increasing geographic spread and IG’s continual investment in its technology platforms and new products.

CEO Tim Howkins admitted it was somewhat difficult to find out ‘how much of our growth is market conditions and how much is genuine organic growth’.

The group also benefited from the collapse of USA-owned broker MF Global, which collapsed and filed for Chapter 11 bankruptcy protection in October. The two companies compete directly in Australia and Singapore so this presented an opportunity for IG Markets to grab market share. MF Global had 16% of the Australian retail CFD market and 8% of the market in Singapore. The group has about £300,000 exposure to the collapse of MF Global, which is negligible.

In the aftermath of MF Global’s crisis last month, CMC Markets has formally announced in a press release that it has decided to completely split client investments and adopt a fully segregated client money model, including client margins to completely eliminate client risk in Australia and New Zealand.

Louis Cooper, head of CMC Mark Australia and New Zealand, pointed out that the company has always strived to retain client money to the highest standards and has always followed client money rules. He said the company has been working toward that model for several months to bring it in line with practices of its parent company in the United Kingdom.

‘While we have always maintained client monies to the highest of standards and in accordance with client money rules, our clients now have that extra peace of mind in knowing CMC has a 100% segregated model,’ said head of CMC Markets in Australia and New Zealand Louis Cooper.  ‘Although the demise of MF Global is not necessarily related to its CFD business, it’s important our clients feel safe about the money they invest via CMC Markets’ market leading platform,’ Mr Cooper added.

UK-headquartered CMC Markets, like MF Global, provides contracts for difference derivatives among types of investments to clients. MG Global faced bankruptcy proceedings last month after its $US6.3 billion exposure on European sovereign debt sent investors into a panic.

Segregated accounts serve to protect customers monies in the event a broker files for bankruptcy protection. The detail on how CMC Markets’ fully segregated client money model operates is as follows:

• Client money, including client margins, are not used to meet the trading obligation of other clients.
• Client money, including client margins, are not used to execute any of CMC Markets’ hedging activity. CMC Markets uses only its own funds to finance such hedging activity.
• CFD funds with CMC Markets are held in a separate trust account with a top-tier Australian bank, and are established, maintained and operated in accordance with the Australian Client Money Rules.

Mr Cooper stressed the adaption of the model is not linked to the MF Global bankruptcy problem which showed there was missing client money on top of losses suffered by MF Global due to its large exposure to European sovereign debt.

‘Although the demise of MF Global is not necessarily related to its CFD business, it’s important our customers feel safe and secure about the money they invest via CMC Markets’ market leading platform,” Mr. Cooper said.

Meanwhile, Natalie Beirne, head of compliance with rival IG Markets, said she welcomed any efforts on behalf of the industry to improve transparency. Ms Beirne said IG Markets had adopted a strict approach to the treatment of client funds from the very start.

Treatment of client monies has recently hit the headlines following the collapse of futures broker MF Global. While the company’s demise has mainly linked to its $6 billion exposure to European sovereign debt and a recently reported commercial loss of $187 million, the company’s use of client monies have also been called  into question.

Private investors in Singapore concerned about their investments rallied outside MF Global’s local offices in the country but ended up distressed and empty-handed on Wednesday after they were informed that their dealing positions were closed and their funds were presently frozen.

A sizable crowd of retail investors waited at the MF Global office for hours in an attempt to recover their funds, but all they were handed was an application form to fill in after being alerted that no money would be distributed until liquidators have wound down the now bankrupt USA brokerage.

One investor, Andre Chia, a 32-year-old pilot said that he’s afraid he might not get his money back. ‘I’m waiting for the liquidation, MAS (Monetary Authority of Singapore), maybe I’ll end up at the Speakers’ Corner,’ he added, referring to the singular place in Singapore where protesters can gather to voice their laments without a permit.

In the aftermath of the collapse of Lehman Brothers in 2008, hundreds of locals met at Speakers’ Corner to protest their losses from mini-bonds linked to the failed USA bank.

Liquidators from KPMG have tried to assure MF Global clients in Singapore that they are working to make sure that all monies in client accounts are returned back to the respective owners. KPMG said that they need to verify records in respect to clients’ segregated accounts, including verification of customers’ ownership to the monies and assets in such accounts before progressing with dispursement.

However a number of investors were upset that they were closed out of trades at a loss, with no possibility to wait for the market to reverse.

‘I feel uneasy, I don’t know how much I will lose. If I have to cut losses, I have to know how much I will lose,’ lamented 57-year-old John Wong, who had S$8,000 ($6,259) deposited in an account with the brokerage company.

About 20 investors visited the office on Wednesday afternoon, while local media reported that at least 60 people converged on the premises that morning. But the concerns were not just limited to clients who dealt directly with MF Global in Singapore, where retail trading is an increasingly popular activity. A number of other brokerage companies utilised the USA company as a counterparty to their CFD products and essentially they’ve been brought to a halt.

AMFraser stated on its web site that from Nov 1, MF Global stopped all trading in CFDs. ‘As such, we have no market access and clients will not be able to close out CFD positions for the time being,’ it wrote in a note to clients. Kim Eng Securities, a unit of Malaysia’s Maybank, and the Singapore unit of Malaysia’s CIMB likewise had to freeze access to their CFD products, although Kim Eng said on its web site on Wednesday that it had restored limited access to allow trades to be closed while CIMB told clients to contact them.

The Monetary Authority of Singapore stated in a report that it has been informed that there were about 1,000 active CFD accounts with MF Global Singapore. It also said that it will work with MF Global Singapore and the liquidators to achieve an ‘equitable treatment of all stakeholders’. Meanwhile Singapore’s central bank said that it would prioritise safeguarding the interests of private investors who had dealings with the Singapore division of collapsed brokerage MF Global. The Monetary Authority of Singapore added that client monies held with MF Global’s Singapore division were safe, as Singapore law obliged the unit to segregate client assets. But it acknowledged the funds could be tied for a period of time as regulators and insolvency auditors sort out the broker’s finances.

MF Global Holdings Ltd., the holding company for the broker-dealer run by former New Jersey governor and Goldman Sachs Group Inc. co-chairman Jon Corzine, filed Chapter 11 bankruptcy today in New York after its bets on European sovereign debt went sour.

The holding company for the futures brokerage and broker- dealer headed by former New Jersey governor and Goldman Sachs Group Inc. co-chairman Jon Corzine sought court protection on Monday morning in New York, less than a week after reporting a record quarterly loss and disclosing a $6.3 billion wager on European sovereign debt. The company’s stock price declined 67% last week with its bonds trading at distressed levels as investors were spooked when MF Global’s debt was downgraded to junk status by both Moody’s and Fitch rating agencies. The gigantic exposure ultimately proved out to be the company’s undoing – not because the trades soured but because things escalated from there with demands from regulators to boost capital, credit downgrades, margin calls and finally bankruptcy.

Trading in MF Global was halted on the New York Stock Exchange prior to the filing. The bankruptcy filing followed the company’s suspension as one of 22 primary dealers by the New York Fed, as well as the suspension on trading by MF Global on the Chicago Mercantile Exchange, ICE and NYSE Liffe, which said MF Global clients were limited to liquidation-only trading.

In Australia, MF Global has 5% of the CFDs market and is thought to be the fourth biggest player behind IG Group and CMC Markets according to a May Investment Trends report. With the future of the UK and Australian divisions in jeopardy many clients were trying to withdraw funds from the provider. Local brokers were also closing off business with MF Global while some of the UK and Australia’s biggest banks were left counting the cost of their exposure.

‘I’ve never seen anything like it,’ said one former employee. ‘We had no idea that things were that bad. I am speechless.’ However, some City sources noted that the their were early signals. About two weeks, European equity research personnel were offered voluntary redundancy packages in what was thought to be a restructuring of the business to focus on fixed income trading.

MF Global, based in the USA with offices in at least seven other countries is thought to have some 2,870 employees. The European division of MF Global, which was once part of Man Group, employs about 725 staff in London, with a further 175 across the Continent. The group’s business in London consists of stock broking in commodities, fixed income, foreign exchange and shares dealing. The share trading business is divided into institutional and contracts for difference and financial spread betting for its retail clients.

The bankruptcy proceeding listed MF Global Finance USA with $100 million to $500 million in assets and $10 million to $50 million in estimated liabilities. The company has about USD 1.6 billion in debt. MF Global had been close to a sale of the bulk of its assets to electronic broker and market maker Interactive Brokers Group late on Sunday, according to people familiar with the situation.

MF Global on Monday sent a note to its spread betting and CFD clients in the UK informing them it had taken a ‘strategic decision’ to discontinue the operations with immediate effect, requiring them to either liquidate their positions immediately or post 100% of their value. ‘The UK and overseas operations of MF Global UK Limited have ceased trading and the joint special administrators are working with the regulatory authorities, clearing systems and other counterparties in relation to the orderly wind down of the trading operations,’ they said in a statement.

Meanwhile the UK FSA confirmed on Monday that MF Global UK Ltd’s administration by KPMG will be conducted under the new Special Administration Regime (SAR) devised for investment firms. This is the first time that SAR will be used since the mechanism was adopted in February 2011 following the collapse of Lehman Brothers. The SAR has advantages over ordinary corporate administrations including a quick return of client assets, the FSA said.

On the other side of the world, MF Global Australia holds about $168 million of client funds and its problems threaten to engulf the Australian Securities and Investments Commission if its offshore problems spill over to the local arm. It is already understood that clients from large banks including Commonwealth Bank, Westpac and ANZ have all been impacted and have been hit with margin calls while clients at CommSec are presently no longer able to open new contracts for difference. ANZ and Westpac both had working relationships with MF Global in which their clients utilised the broker to trade CFDs, although both said only a small number of their customers were affected. All three banks said their financial exposure to MF Global was either very small or not material. In Asia, Singapore Exchange Ltd (S68.SG) clamped down by directing MF Global’s local arm not to take on new derivatives positions and to reduce current trades with immediate effect.

The broker of commodities, derivatives, shares and forex had $7.2 billion of customer funds in segregated accounts as of Aug. 31, according to the Commodity Futures Trading Commission. The largest unsecured creditors are JP Morgan Chase – owed $1.2bn – and parts of Deutsche Bank, which are owed $1bn in notes due in 2016 and 2018, MF Global said in court papers.

The bankruptcy and ominous sell-off are a sad ending for the 228-year-old brokerage led by Jon Corzine. It also brings an ignominious end to the plans of Mr Corzine, chief executive of MF Global and former chief executive of Goldman Sachs, who had been aiming to expand the operation from its roots as a futures broker into a mini Goldman by taking on more risky trades.

Comments: A brokerage company that was clearly too aggressive and greedy for its own good. In partuclar, Corzine’s decision to chase yield by investing heavily in European sovereign debt was clearly ill-advised and always seemed much too risky.

Whose funds were MF Global using to leverage 30 times into PIGS debt? It would appear that Corzine walks in, probably with a heavily performance related contract, leverages up a sleepy balance sheet, then walks away when it collapses. What were the rest of the (ex-Goldman) board doing, and were they all complicit? The end result being that the staff lose their jobs.

Australian Stock Exchange operator ASX Group stopped market trading last week due to technical problems, leaving brokers and CFD traders furious during a period of extreme market turbulence.

Just moments after the stock market opened on Thursday, the exchange sent out a notification and stated that all trades that were executed before the stoppage were being reviewed. New overnight news originating from Europe about a Greek debt deal witnessed markets rallying strongly, but CFD traders in Australia were unable to react as the exchange struggled to deal with its IT issues.

As well as the European development, some large local companies like National Australia Bank Ltd., Woolworths Ltd. and AMP Ltd released a trading update. The cumulative market capitalization of the 10 Australian companies with major announcements in the morning made up more than 10% of the value of the Australian stock market.

‘It’s hugely frustrating on a trading day when you have macro headlines out of Europe and a host of corporate reports to deal with,’ said IG Markets institutional dealer Chris Weston. ‘It shows why we need an alternative to the ASX.’

Trading resumed at 4pm after a 4 hours shutdown but the incident was something of an embarrassment for the Australian Stock Exchange; coming just days ahead of the launch of trading in Australia by rival bourse operator Chi-X on Monday. The launch will see the break of a two-decade monopoly held by the ASX. The serious issue was the lack of opportunity for CFD traders and investors to either mitigate their market risk or increase exposure, in particular during this volatile period in Europe.

‘Chi-X must be rubbing their hands with glee,’ said one observer. For the Australian stock exchange ‘it must be awful in terms of the timing ahead of the arrival’ of a new rival.

This is not the first time that the Australian Stock Exchange has experienced problems, with the last outage having taken place last February in a episode that forced the Australian exchange to suspend operations early.