as Dealstream Stumbles

Vox Falls Most in Four Years as Dealstream Stumbles (Update1)

By Vernon Wessels

Sept. 23 (Bloomberg) -- Vox Telecom Ltd. fell the most in four years in Johannesburg trading after the collapse of Dealstream Securities Ltd., a stockbroker holding cash on behalf of the South African Internet service and software company.

Vox fell 61 cents, or 31 percent, to 1.34 rand, the biggest drop since June 2004. The stock has declined 40 percent this year, giving the Johannesburg-based company a market value of 1.56 billion rand ($191 million).

Dealstream, which traded in derivatives called contracts for difference, or CFDs, was stopped from dealing after failing to meet obligations for transactions done on its own behalf on the JSE Ltd.'s derivatives division, the Johannesburg stock exchange said in a statement. Rand Merchant Bank, which is responsible for clearing Dealstream's trades, restricted trading by the company and assumed all its open positions, JSE said.

Dealstream holds 30 million rand of Vox's cash, ``the recoverability of which the company believes has now been materially prejudiced,'' Vox said in a statement to the stock exchange today. The company is in talks with unidentified counterparties to ensure that positions held by Dealstream are taken up in an ``orderly'' way, it added.

Calls to Dealstream's Johannesburg office and trading room weren't answered. Paul Dixon, the managing director of Argil Venture Capital (Pty) Ltd., which owns a stake in Dealstream, didn't return messages on his office phone seeking comment.

Portfolio

Rand Merchant Bank ``has taken over Dealstream's portfolio of diversified local listed shares at a market value of approximately 1 billion rand together with the remaining initial margin,'' the investment bank, a unit of FirstRand Ltd., said in an e-mailed statement. ``This portfolio will be managed as part of RMB's portfolio.'' Dealstream clients do not have ``any recourse to RMB,'' the bank added.

Thats what I call the best of both worlds RMB

So-called CFDs allow investors to profit from share-price movements by buying a portion of a stock's value, allowing them to leverage the amount traded.

To contact the reporter on this story: Vernon Wessels in Johannesburg at vwessels@bloomberg.net.