Opes prime was preparing to list on ASX. THE two architects of...

Opes prime was preparing to list on ASX.
THE two architects of Tricom's embattled securities lending business, Julian King and Laurie Emini, are planning a backdoor listing of their broking firm Opes Prime, in a move that will value the business at more than $100 million.

Mr King said Opes Prime, which had more than 70 staff and a securities lending book well in excess of $1 billion, had taken up some of Tricom's $1.5 billion securities lending book.

Opes Prime is using a company called Reco Financial Services to backdoor list on to the ASX. Reco is a shell that used to be an insolvency business.


The following is a big problem if the rumour is true.


Tricom and Opes Prime have similar models in their securities lending business. The model is such that clients who take out a securities lending agreement (which is similar to a margin loan) sign away their legal ownership of the shares to Opes Prime in return for a fee.

This means if Opes Prime gets into financial difficulty, clients become unsecured creditors and, as always, they remain behind the banks. Put simply, the client takes on Opes Prime's credit risk.

But what makes Opes Prime and Tricom different from most other margin lenders is that they do not own shares on trust for the client.

In most cases margin lenders hold shares in a separate account in the client's name. In Opes Prime and Tricom's case, the shares get mixed in with Opes Prime's and Tricom's and everyone else's shares in providing securities to the banks that provide the margin loans to Opes Prime and Tricom.