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
AZ NGA’s CEO has unpacked how its recent $345 million debt facility from Barings will accelerate its advice network’s growth ambitions, and allow its largest firms to access a greater source of funding.
Research by Colonial First State has found women are reluctant to make retirement preparations, despite 62 per cent saying they feel that they are unable to achieve a comfortable retirement.
Managed accounts saw net inflows of $14.3 billion in the six months to 31 December, according to the latest IMAP FUM census.
The increased bids for Insignia from Bain and CC Capital value the company at $3.3 billion, while there is still a possibility for competing bids from rival players such as Brookfield.
