Macquarie Securities pays infringement notice
Macquarie Securities (Australia) Limited (MSAL) will pay a penalty of $126,000 after it was deemed to have entered a market transaction that was not in accordance with the client’s instructions.
The infringement notice was given by the Markets Disciplinary Panel (MDP) who believed MSAL contravened Rule 3.3.1(b) of the ASIC Market Integrity Rules (Securities Markets) 2017.
MSAL were engaged by an Australian Securities Exchange (ASX) listed company to act as the broker to conduct, on behalf of the company, an on-market buy-back, which buys back shares on a market in the ordinary course of trading.
The MDP said it was satisfied that the client’s instructions included an overarching instruction for the buy-back to be conducted in the ordinary course of trading. The MDP considered that orders that were matched otherwise than in price/time priority were not in the ordinary course of trading.
MSAL conducted part of the buy-back on ASX Centre Point (ASXC), a “dark” market operated by ASX. Participants may enter orders into the order book for ASXC, but they are not visible to the rest of the market before the orders are matched as trades. MSAL enabled a participant preferencing functionality in ASXC under which its orders will be satisfied before any existing unmatched orders of other participants, unless those unmatched orders have price priority.
The MDP said it was satisfied that the purchase of 1.2 million shares at $2.465 on 6 May, 2019, on ASXC was not in the ordinary course of trading as MSAL‘s sell order, which traded with MSAL’s buy order, was preferenced ahead of two existing sell orders on ASXC that were submitted by another participant and which had time priority.
The MDP said it was not satisfied that MSAL’s conduct in relation to any of buy-back transactions on ASXC resulted in the market for the shares not being both fair and orderly. MSAL’s conduct did not affect the price of the shares and did not result in the other participant’s sell orders not being able to transact with MSAL’s buy orders.
This was the first matter considered by the MDP under the new penalty regime that applies to conduct occurring after 13 March, 2019.
MSAL had subsequently ceased using ASXC to effect buy-back trading.
AUTHOR
Chris Dastoor
Recommended for you
Financial Services Minister Stephen Jones has shared further details on the second tranche of the Delivering Better Financial Outcomes reforms including modernising best interests duty and reforming Statements of Advice.
The Federal Court has found a company director guilty of operating unregistered managed investment schemes and carrying on a financial services business without holding an AFSL.
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
Compliance professionals working in financial services are facing burnout risk as higher workloads, coupled with the ever-changing regulation, place notable strain on staff.
