Broker Morrison Securities drops high-risk clients as regulator circles

Australia's biggest options broker has dumped its riskiest clients as regulators circle, with parent company Beaconsfield Capital now hunting for a new risk chief.

Shantanu Jha is the co-founder of Beaconsfield Capital, which owns 80 per cent of broker Morrison Securities. Picture: Jane Dempster/The Australian.

Morrison Securities has dumped clients and is on the hunt for a new head of risk amid regulatory scrutiny over its liquidity and a series of high-risk trades.

Morrisons, majority owned by US private equity firm Beaconsfield Capital, moved several high-risk options trading clients off its books last month after getting hit with increased capital demands from the ASX, The Australian can reveal.

Options are financial instruments that allow investors to make leveraged bets on stock price movements, with potential profits and losses much higher than when buying and selling stocks.

Sources close to the firm denied the move was due to liquidity issues, instead framing it as prudent de-risking of the client book after it was forced to decline certain trades in October once regulators raised concerns about its capital position and the ASX demanded it hold additional cash.

Morrisons describes itself as Australia’s largest retail options broker and is understood to have a high concentration of the small cap options players operating in the local market. It has about 45,000 clients in total.

As markets reacted to Donald Trump’s fresh China tariff threats in mid-October, the ASX ordered Morrisons to post millions of dollars in additional capital to protect against potential losses on high-risk options trades.  The broker complied with the order but was then unable to take on all of the trades coming in from clients.

Soon after, it moved those riskier accounts off its books. Peer ­AUSIEX picked up at least some of these accounts.

Since these clients were moved on, Beaconsfield has put more capital into Morrisons to shore up the business and is understood to be on the hunt for a new head of risk as it looks to tighten up its risk framework. This new framework will include requiring clients to post more cash on options trades and dialling back the risk by declining very leveraged trades.

Beaconsfield Capital co-founder Shantanu Jha said concerns around Morrisons’ liquidity were unfounded.

“Morrisons remains well capitalised. It hasn’t breached or violated any of its capital requirements, and continues to grow healthily,” he told The ­Australian.

Both the ASX and the securities regulator, the Australian Securities & Investments Com­mission, questioned Morrisons about the firm’s capitalisation in recent weeks amid growing concerns about its risk tolerance and ability to execute and settle trades.

The US-based Beaconsfield picked up Morrisons from the wreckage of New Quantum Holdings last year, months after tipping New Quantum into ­receivership.

Beaconsfield was the main backer of New Quantum, putting $50m into the business from mid-2023, including to help fund the $40.5m purchase of 80 per cent of Morrisons. The seller, Sequoia Financial, retains the remaining 20 per cent. To get the Morrisons deal over the line, New Quantum took a $15m loan from Keystone Asset Management, the responsible entity of the Shield Master Fund in July 2023. The $15m allegedly came from Shield investor money.

In 2024, Keystone called in the loan, leading Beaconsfield to force New Quantum into receivership. The Shield fund has since collapsed, putting 5800 Australians at risk of losing up to $480m in superannuation savings, while Sequoia subsidiary InterPrac Fin­ancial Planning is being sued by the corporate cop over its role in the scandal.

Shield liquidators have written off the $15m. Mr Jha has previously said he did not know the $15m came from Shield.