CBA launches adviser margin-call tool
Commonwealth Bank of Australia’s broking arm CommSec has created a margin lending tool that enables financial planners to assess the probability that clients will face a margin call against them.
The ‘Margin Call Calculator’ as it is known has been developed by CommSec Quantitative Research, and aims to eliminate the uncertainty traditionally associated with margin calls that has prevented some investors from maximising their gearing strategies, the group says.
According to CommSec the tool allows planners to assess the probability of margin calls being made on clients in any given week, month, quarter or year.
Based on historical data collated from 21 million market simulations, the tool allows planners to use real and hypothetical market situations to develop more informed gearing strategies.
“Planners can experiment with different diversification strategies, assumed growth rates and other what-ifs, to determine the probability of a margin call for their client,” a group spokesperson says.
Planners can also determine the probability by balancing the interplay of loan to value ratios (LVRs), margin loan buffers, expected growth and the diversification mix of a portfolio.
They can also use it to determine the probability of margin calls at different buffer and gearing levels over time.
Finally the calculator can also determine the maximum amount a client can borrow through Colonial Margin Lending to buy stocks or managed funds.
Recommended for you
ASIC has launched court proceedings against the responsible entity of three managed investment schemes with around 600 retail investors.
There is a gap in the market for Australian advisers to help individuals with succession planning as the country has been noted by Capital Group for being overly “hands off” around inheritances.
ASIC has cancelled the AFSL of an advice firm associated with Shield and First Guardian collapses, and permanently banned its responsible manager.
Having peaked at more than 40 per cent growth since the first M&A bid, Insignia Financial shares have returned to earth six months later as the company awaits a final decision from CC Capital.
