newspaper feature article, page-5

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    Paul,

    From what I have read and heard in the media and from other anecdotal information, the three recurring and over-riding themes that go to the crux of the Opes Prime problem (which in itself is only symptomatic of a much larger problem) are as follows.

    Open slather, uncontrolled, unmonitored, reckless Short Selling in the long run benefits a relatively small number of parties. The vast majority of participants in the market (in the long run) do not benefit and in fact it also affects the wider community.

    The second point is that it is really becoming quite evident that the failure to effectively rectify the debt levels of accounts that had fallen beyond their buffer and into margin call with in the standard 24 hour time frame has been a large contributor to the current situation. The status of Buffer and Margin Call are there for a good reason, to protect the lender.

    Its one thing to break other people’s rules and try not to be held accountable, however, what sort of an idiot breaks their own rules.

    The third point is that very few people spend the required amount of time assessing what they are getting themselves into. Thus marry in haste, repent at leasure still holds water.

    For the record I worked in Margin Lending for approx 7 years. I have 3 margin loans with three different lenders. I have done this to spead my financial risk and the risk that they cannot deliver the services that I require.

    My experience is that less than 5% of people who sign a margin loan contract bother to read them in their entirety and less than 2% make a copy and keep it handy. However, when they sign, they state that they have read and understood what they are signing.

    It may well take anything from half an hour to 4 hours for some people to read the relevant loan documents. Regardless of how busy you think you are, in the long run it will always turn out to be time well spent.

    Those empty vessels that made a lot of noise about the virtues of Short Selling using only the positives and totally ignoring the negatives when putting forward their point of view have gone some what quiet lately. I can only assume that some cat is choking on their verbose tongues.

    Paul, your time would be better spent pointing out to the wider Australian community why the ASX should really be applying for a gaming license as they seem to be only interested in running a casino.

    MI
 
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