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Pershing Securities fined over AOP failings

Financial services firm Pershing Securities has paid a $40,000 infringement notice issued by the Markets Disciplinary Panel over failings regarding the filters used by its automated order processing (AOP) system, ASIC has said.


The Markets Disciplinary Panel found that in December 2015, one of Pershing’s market-making clients with direct market access through the business’ AOP system entered orders in relation to exchange traded bond units.

“This resulted in a trade that was 99.9 per cent from the last traded price and involved no change in beneficial ownership,” the regulator said.

ASIC noted that the AOP filters used by Pershing were certified, but added that “when it initiated a new connection to enable the client to use its AOP system, the new connection was incorrectly mapped to a destination that did not contain the certified AOP market filters”.

“Although Pershing tested the operation of the filters in the test environment, it failed to sufficiently check whether the filters were operating correctly in the live, production environment,” ASIC said.

The “appropriate automated filters” required under ASIC regulation to prevent this had not been in place for this particular client for three months, ASIC found, though the market impact had been minimal and the trade in question cancelled within minutes.

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