Credit Suisse pays $52,000 penalty to ASIC
Credit Suisse's Australian equities arm has paid a $52,000 penalty to the Australian Securities and Investments Commission (ASIC) after a glitch in its automatic order processing system was found to have breached "the efficiency and integrity of the market".
ASIC's Markets Disciplinary Panel examined an offer placed by a Credit Suisse client to purchase 942,517 ordinary shares of Celamin Holdings in May 2011.
The client mistakenly placed the order using a Credit Suisse trading strategy that processed the relevant order by varying the participation rate.
As a result, no maximum participation rate was specified - which meant that Credit Suisse's automatic order processing (AOP) system entered 1,272 bids for Celamin Holdings shares within a two-hour period.
The entry of the bids resulted in the purchase of 458,199 Celamin Holdings shares in 39 market transactions, inflating the price of Celamin Holdings from $0.425 to $0.78 - a 83.5 per cent increase.
The Markets Disciplinary Panel found Credit Suisse had breached ASIC Market Integrity Rules by failing to have appropriate filters in relation to AOP.
"Credit Suisse's AOP filters were inappropriate in that they were unable to prevent [the trading system], operating with no maximum participation rate, from creating price distortion in relation to the market in Celamin Holdings," said an ASIC statement.
However, Credit Suisse halted the transaction as soon as it became aware of the problem, and self-reported the issue to ASIC. Credit Suisse did not dispute the facts of the case, and the Markets Disciplinary Panel was satisfied it was an isolated incident.
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