Macquarie Prime exiting the market - implications on small caps, page-5

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diligent

25,520 Posts.

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07/03/17

18:15

Post #: 23164481
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Originally posted by 13th ↑

I just received an email informing me that Macquarie Prime will cease to offer margin lending and shorting capabilities through their online trading platform as of April 28th and should you have any open positions on the short side, these will be effectively closed out on this date, if you haven't unwound the position prior.

If you have gearing against your portfolio, you have until the 28th of April to refinance this to another margin lender or repay the outstanding loan or risk positions being sold on market to recover outstanding loans.

Macquarie Prime are recommending that you seek alternate lending via Bell Potter margin lending, however if you, like me have used the macquarie prime facility to access lending on the small / mid cap market, you will find that Bell Potter will be of no assistance as they do not offer any gearing in this space.

To be honest it's a bit stiff from Macquarie to pull funding lines from the Prime platform. However we have come to expect this from Macquarie over the years as they have time and time again pulled funding from business units and effectively shut them down, with no regard to those who have open business with them. The domestic mortgage and insurance market comes to mind.

By informing you to apply for (and go through a new margin lending application process) with another provider which they know will not offer the same LVR's for over 50% of what Macquarie Prime offers, is not a solution to existing prime users. An alternative should be to offer no new lending and let the book run off as positions are sold or work to find a margin lending to re-finance positions on your behalf.

Iam not sure what gearing levels look like for some small cap stocks, however I hope there are no 'Opus Prime' style positions that will see decent levels of stock sold on market by Macquarie when account holders fail to re-finance positions elsewhere...

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I am surprised that Macquarie Prime offers margin loans on low cap stocks, as it is a very risky business, but which sometimes can be very profitable.
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