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Macquarie cops fine for ‘negligent’ market conduct

Macquarie cops fine for ‘negligent’ market conduct

Sarah Simpkins
— 1 minute read

ASIC’s Markets Disciplinary Panel has made Macquarie pay a $300,000 penalty after finding it guilty of providing inaccurate and incomplete regulatory data to stock exchanges. 

The MDP said it has grounds to believe that Macquarie contravened market integrity rules that deal with the provision of regulatory data to the ASX and Chi-X.

During a four-year period from July 2014 to July 2018, Macquarie was said to transmit approximately 42 million orders to ASX and Chi-X that included incorrect regulatory data or omitted required regulatory data. 

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Over the same period, Macquarie also submitted approximately 377,000 trade reports to ASX and Chi-X with the same deficiencies.

The kinds of regulatory data that was incorrect or missing was information about:

  • Capacity: a notation to identify whether Macquarie was acting as principal or agent;
  • Origin: a notation to identify the person on whose instructions Macquarie was acting; and
  • Intermediary: the AFSL number of an intermediary using Macquarie’s automated order processing system.

Once Macquarie became aware of the scale of the issues, it reported to ASIC, undertook a comprehensive review to identify the causes, and promptly implemented remedial measures.

Macquarie had intended to comply with the market integrity rules, the MDP found, but there were weaknesses in the “configuration and integration of Macquarie’s systems, its process for on-boarding new clients and its control framework.”

The panel called Macquarie’s conduct ‘negligent’, criticising its poor design, inadequate updates to its systems, high number of orders and trade reports containing incorrect data across multiple categories and the length of time that the problems persisted without detection.

The provision of market data enhances market transparency, the regulatory body said, adding inaccurate data impedes regulatory decision-making both by market operators and ASIC.

“Given Macquarie’s scale, market share and high market flows, the MDP considers that market participants such as Macquarie have greater potential and capacity to undermine market integrity,” the regulator said.

“A market participant such as this should carry a greater responsibility to properly manage the risks that flow from their conduct. If that risk is poorly managed, the financial consequences to the market participant should be commensurately greater.”

 

 

Macquarie cops fine for ‘negligent’ market conduct
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