Access Brokerage suspended from trading

Access Brokerage has been banned from trading on the share market and the New Zealand Exchange has launched an inquiry into the company.

NZX today said the Wellington-based share brokerage was in default and suspended it from its status as an NZX firm, effective immediately. The matter has also been referred to the Minister of Commerce, the Securities Commission, and the Serious Fraud Office.

NZX said in a statement a preliminary inquiry over the last 48 hours had shown Access was unable to meet its NZX obligations. At this stage NZX said just under 725 Access clients appeared to be directly affected by Access' default.

In a brief message on its website this morning, Access said its major shareholder had decided it should not enter any further financial obligations.

"We are aware that you have unsettled trades. The status of these trades is uncertain at this time," the statement said.

NZX said every incomplete or partially incomplete contract with Access was deemed terminated, adding that it expected all orders would be withdrawn and all trades with Access Brokerage would be cancelled by midday.

NZX Regulation is now conducting an inquiry, which includes an investigation of the actions of Access directors, executives, principals, suppliers and their professional advisors.

"Clearly we are very disappointed that Access Brokerage has defaulted," NZX chairman Simon Allen said. "NZX's primary concern is for Access' clients. As the frontline market regulator it is also critical that we do all that we can to minimise the impact on the market, from the actions of this one NZX Firm."

NZX chief executive Mark Weldon said it was important the confidence and integrity of the market was maintained.

"NZX will endeavour to ensure that the obligations that Access has to affected clients are honoured for any trades that have occurred on NZX Markets during the period concerned," Mr Weldon said.

NZX's options included managing the use of the Fidelity Guarantee Fund, pursuing legal action against those responsible, or using NZX's own funds -- which NZX is not legally obliged to do, he said.

"Over the last 12 months NZX has implemented a comprehensive compliance programme and strengthened our surveillance and inspection capabilities in this area. NZX is therefore extremely dissatisfied that these events were able to occur," Mr Weldon said.

NZX was now working with relevant Government agencies to strengthen its market structure.

"In particular, NZX will seek to develop a central counterparty and a true delivery versus payment system (as seen in most other international markets around the world), as opposed to the current on-register system. We will also be considering potential enhancements to the NZX Participant Rules."

NZX has established a helpline for concerned Access clients where they can register for information and assistance from NZX. The number is 04 496 2887 and it will operate during normal business hours.

NZX will also publish more information on its website.

- NZPA