Longo’s remarks come on the heels of a record $5 million fine imposed on the bank for failing to prevent these questionable orders, which raised serious concerns about compliance and market integrity.
Macquarie exhibited “a poor attitude to compliance”, Longo said on Friday before a parliamentary committee, emphasising that the bank did not adequately respond to warnings regarding the involvement of three clients in these trades.
“What was particularly significant, in my opinion, was not only the number of orders where this activity occurred or the fact that three clients of Macquarie were involved, it was how Macquarie handled the matter, the matter that was, in my view, of most concern,” Longo said.
“Those warnings were effectively ignored for too long. There were acknowledgments but there was no action. Macquarie failed to appreciate the seriousness of its obligations as a market participant.”
Last month, following an Australian Securities and Investments Commission (ASIC) investigation, the Markets Disciplinary Panel (MDP) fined Macquarie nearly $5 million for breaching market integrity rules.
The bank was found to have allowed three clients to place suspicious orders on up to 50 occasions between January and September 2022 – a period marked by unprecedented volatility in global energy markets.
Each order exhibited characteristics of an intention to “mark the close”, influencing the daily settlement price in a way that benefited the clients.
Commenting on the fine at the time, ASIC said the record penalty reflected Macquarie’s serious and prolonged failures to detect and prevent suspected manipulation in the ASX 24 market for energy derivatives.
Also at the time, Longo revealed that ASIC had contacted Macquarie about these troubling orders on multiple occasions, asserting that the bank “repeatedly failed” to take timely action.
“The consequences of manipulating energy markets can have a detrimental flow on impact to supplier funding costs and, in turn, energy prices. This can lead to higher energy bills for consumers who are already struggling with the cost of living,” the chair said.
The MDP found that Macquarie’s failure to respond to ASIC’s concerns in the context of the heightened need to monitor the electricity futures market was an aggravating factor in determining the size of the penalty.
Expanding on this point on Friday, Longo noted that the fine not only marks the “highest penalty ever imposed” by the MDP, a panel made up of Macquarie’s industry peers, but also serves as a reminder of the gravity of the situation.
