my broker told me opes had been a big net sel , page-3

This explains what is happening, but I guess we will have to wait and find out how this effects PRE...

"For the record, ANZ is owed $650 million and Merrill Lynch is owed about $400 million. Both say they are fully covered by security (shares), of which they have already taken possession and are already selling into the market.

That, at least, is the bare bones of what is likely to be the most spectacular and messiest fiasco of this bear market.

That’s firstly because ASIC is now investigating breaches of the Corporations Act, while ASX is talking about “irregularities”, having cancelled the firm’s licence.

This afternoon Chris Campbell said in answer to a question: “I hesitate to say whether funds have been stolen. That is unclear at this stage.”

And the second reason this collapse will be spectacular and messy is that about 1200 retail clients of Opes are about to be traumatised by the sudden and utterly unexpected loss of their wealth – up to $1 billion.

Opes has at least one thing in common with Tricom – investors who use the firm to buy shares on margin have assigned beneficial ownership of their entire holdings to the broker – including their original collateral (whether they know it or not, and often they don’t).

Opes’ business model is, or rather was, that it lends as a finance broker on commission on behalf of ANZ and Merrill Lynch and takes full ownership of the scrip provided as collateral. It then lends that stock for a fee to short sellers, along with stock provided by institutional investors – for another fee.

Now that Opes is in receivership, its secured lender, ANZ, now effectively owns all of the shares that had been put up as collateral. Some of it is already being sold, the rest has to be recovered from those who borrowed it.

To be clear: all of the shares that Opes Prime’s margin loan clients think they own, and owned before they dealt with Opes, are now owned by ANZ – no matter how small their loan is.

For example, I heard of a real case this morning of an investor who bought $1 million worth shares through Opes, of which $250,000 was borrowed. The entire $1 million has now been lost and the investor becomes an unsecured creditor of Opes Prime.

So that person will lose $750,000 in assets simply through the mistake of using Opes Prime as broker and lender for a third of that amount. That story will be repeated many times over."