The Australian Securities and Investments Commission (ASIC) has penalised Societe Generale Securities (SocGen) Australia after the market disciplinary panel (MDP) found it failed to prevent suspicious trading activity in the ASX 24 electricity and wheat futures markets.
The fine followed an ASIC investigation into one of the largest participants of the ASX 24 and determined that two SocGen clients placed 33 suspicious orders between May 2023 and February 2024.
According to the regulator, each order carried signs of an attempt to “mark the close”, where trades are made in the final minutes before market close to influence the daily settlement price.
ASIC warned such an activity can affect supplier funding costs and ultimately flow through to electricity and wheat prices for consumers.
The suspicious orders occurred during a period of volatility in global energy and grain markets, with supply disruptions linked to the war in Ukraine, according to ASIC.
The MDP found SocGen should have suspected the 33 orders were intended to create a false or misleading appearance in the market.
It said the firm remained responsible for trades made by its clients, including through direct market access, and should have acted sooner.
ASIC chair Joe Longo said the case was about maintaining “integrity and confidence in our markets that can have real world impacts on electricity and wheat prices”.
“ASIC contacted SocGen on five occasions in 2023 to serve notices, ask questions or raise concerns about volatility in futures markets and suspicious orders placed by its clients,” Longo added. “Despite ASIC’s contact, SocGen failed to take timely and effective action, and permitted additional, suspicious orders to enter the market.
“SocGen’s lack of response and inadequate remediation were made more significant because they are the second largest participant in the ASX 24 Market.”
It was the MDP’s assertion that SocGen’s conduct was “reckless”, while raising concerns about weaknesses in the company’s compliance and surveillance systems, including training, skills and oversight to detect manipulative trading.
“Market gatekeepers have a duty to keep our markets safe,” Longo said. “Missing suspicious orders puts the entire system at risk.”
SocGen was the second largest participant in the ASX 24 market as at June 2023, accounting for 11.8 per cent of total trading volume and as a wholly owned subsidiary of French banking group Societe Generale, ranked the world’s 19th largest bank by assets at the end of 2023.
The action is part of a series of ASIC interventions in the sector.
In the past 15 months, Macquarie Bank, JP Morgan Securities Australia, Delta Power & Energy, and COFCO entities have also faced penalties or proceedings for alleged manipulation in electricity and wheat futures.
SocGen has complied with the infringement notice and paid the fine. The company did not contest the breaches, though ASIC noted that compliance with the notice is not an admission of guilt.
