Friday 18 August 2017

Davy and Goodbody concerned over plan to make them name top clients

Emmet Oliver Deputy Business Editor

Davy and Goodbody, Ireland's two largest stockbrokers, have reacted angrily to proposals that they disclose the names of their top three clients to the Central Bank.

The brokers, in a joint letter, said such information was "highly sensitive'' and should not be part of new reporting requirements being considered by the Central Bank, led by governor Patrick Honohan.

The bank is looking at a range of changes in how investment firms report crucial information and they want quarterly client fund reports to apply to brokers.

"We have a general concern about reporting on our top three clients -- we cannot see the relevance of this except in a risk concentration scenario,'' says a joint letter sent to the bank.

"Could we report this information without naming our clients?

"Could we introduce a reporting threshold above which a client would be named?'' the brokers ask.

"We have a general concern. As the Central Bank will appreciate, this information is highly sensitive.''

The bank is believed to want the information to form part of client funds reports, but the names would not be disclosed to any other agencies.

Regulators across Europe are concerned that a collapse of certain clients could cause damage to brokers and investment firms who rely on them.

This is because many clients trade and invest on margin, meaning they often build up large exposures with their brokers, only settling amounts occasionally.

The two brokers want an explanation from the bank about what they intend to use the information for.

"We would welcome further detail or explanation on this matter," write the letter's two authors, Johnny Cleary, the financial controller of Goodbody, and Peter Newman, chief financial officer of Davy Stockbrokers.

The broking industry is currently under financial pressure as institutional business dries up and Irish bond issuances come to an end due to the European debt crisis.

Mergers and acquisitions work has also fallen away.

This has fuelled talk in the industry of further consolidation.

Earlier this year Fexco bought Goodbody for €25m, while there has been speculation of Cantor FitzGerald doing a deal with Dolmen Stockbrokers in the future.

Irish Independent

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