Macquarie Securities pays $300,000 penalty over market integrity rules contravention

Maria Nikolova

Millions of orders with incorrect regulatory data result in $300,000 infringement notice for Macquarie Securities.

The Australian Securities & Investments Commission (ASIC) has announced that Macquarie Securities (Australia) Limited has paid a penalty totalling $300,000 in order to comply with an infringement notice given by the Markets Disciplinary Panel (MDP).

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

From July 2014 to July 2018, Macquarie transmitted approximately 42 million orders to ASX and Chi-X that included incorrect regulatory data or omitted required regulatory data. During 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, origin, and intermediary.

The MDP determined that whereas Macquarie intended to comply with the market integrity rules, there were weaknesses in the configuration and integration of Macquarie’s systems, its processes for on-boarding new clients and its control framework.

The MDP considers Macquarie’s conduct to be negligent, having regard to Macquarie’s poor design and implementation of updates to key systems, the high number of orders and trade reports containing incorrect or missing data, the multiple categories of incorrect or missing data and the length of time the problems persisted without detection by Macquarie.

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. 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.

The MDP noted that, once Macquarie became aware of the scale of the issues, which it reported to ASIC, it undertook a comprehensive review to identify the causes, and promptly implemented remedial measures.

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