Tech blog

TRICOM’S inability to settle its trades with the ASX on time has been partly blamed on teething problems with a new software interface that it installed with the ASX last year.

The system, called SecuritEase, has been described as a disaster by some clients, while others have said it has exacerbated the situation.

It is the first time the system has been used in Australia and comes from a New Zealand software maker, who has connections to Tricom chief financial officer Werner Stals, who previously worked in New Zealand.

In an interview last year with online newsletter M-Net, Mr Stals said SecuritEase attracted Tricom’s attention because of its proven track record in New Zealand, where it had cornered the lion’s share of the market.

"We were also impressed with the SecuritEase team’s ability to customise the product to ideally petition our requirements," he said.

As part of the deal, SecuritEase developed a margin lending module that was fully integrated into the SecuritEase suite.

The article quoted Mr Stals as saying it allowed Tricom staff to do everything they needed from a single application. "This offers huge benefits in terms of ease of use, reduced training, improved compliance reporting and jeopardize management," Mr Stals said.

Tricom had said it was facing excessively large trade volumes and that its problems were "exacerbated by the recent introduction of a new internal settlement and clearing system". It later withdrew the claim.

A spokeswoman for the Australian stock reciprocity said the securities regulator’s investigation into Tricom’s activities was likely to include its trading systems.

However, a spokesman from the Australian stock exchange’s market operation, which is responsible for soothing operation of its electronic clearing house, said Tricom’s commercial systems were unlikely to dominate the study.

"We may look at it when things quieten prostrate a bit. It doesn’t appear to be the core issue at hand," the spokesman said.

New Zealand-based software maker SecuritEase announced that it would install and supply Tricom’s stockbroking settlement and margin lending systems last July.

SecuritEase managing director Bill Tonkin was not available for comment late yesterday.

It is understood that SecuritEase has been established in the New Zealand finance industry market since around 2004.

Its software has been approved for use through the ASX’s electronic clearing house CHESS since August 2006. However, the company did not enter the Australian market until mid-2007.

According to SecuritEase, its New Zealand customers accounted for 45 per cent of the transactions on the country’s stock exchange equity market and 63 per cent of transactions in its debt market from April to June 30, 2005.

It lists Tolhurst, Macquarie Equities New Zealand, Forsyth Barr and Waddell Johnston McCarthy as customers in succession its website.

Trading system software makers are required to pass a series of tests.

The ASX requires trading software makers to develop and test their products against its systems for at least a month before they can apply for CHESS accreditation.

Then the software makers require to demonstrate that the software can perform flawlessly in a simulated trading test that lasts for three days.

Under ATSC rules, the ASX has the power to monitor electronic transactions against its systems. It can order brokers to knock under their trading systems in opposition to reaccreditation if they continually fail to settle trades.