Macquarie Bank has been hit with a record $4.995 million fine over failing to stop suspicious orders placed on the electricity futures market.
The fifth largest bank in Australia was imposed the biggest fine ASIC’s Market Disciplinary Panel (MDP) has ever seen.
According to the corporate regulator, Macquarie breached market integrity rules on 50 occasions between January and September 2022 by allowing three clients to place suspicious orders.
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Each order was placed within the final minute of market close, meaning the clients with interest in those contracts manipulated the daily settlement price in a favourable direction.
ASIC said Macquarie “should have suspected” that 50 of the orders were submitted with the intention of creating a false or misleading appearance in the market.
Joe Longo, ASIC chair, said the MDP imposed the record-breaking fine to reflect Macquarie’s “serious, prolonged and potential systematic failure” to detect the manipulation of the market.
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“Macquarie is the largest market participant in energy derivatives and given its role as a gatekeeper, it must ensure suspicious orders are not permitted to be placed on our markets,” Longo said.
“We put Macquarie on notice about suspicious orders placed by its clients on numerous occasions and it repeatedly failed to take timely action to address the conduct of its clients and the gap in its surveillance capability.
“As a consequence, it permitted further suspicious orders to be placed on the market.”
ASIC reported the suspicious orders were submitted during a period of volatility in energy markets due to the Russia-Ukraine war.
It said Macquarie was notified on six separate occasions to alert the bank of its concerns.
The MDP found Macquarie “failed to appreciate the seriousness of its obligations” and didn’t act promptly or appropriately.
In a statement after ASIC’s announcement, Macquarie Bank acknowledged the fine issued by the MDP and said it had paid the 4.995 million penalty.
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“The matter relates to trades made in 2022 by three commercial clients placing electricity futures orders electronically through our futures business. Macquarie takes full responsibility for all aspects, particularly given its important role as gatekeeper and the largest market participant facilitating clients’ activity in electricity futures in Australia and New Zealand,” the statement said.
“There are learnings from this matter and Macquarie takes ASIC’s action very seriously.
“Macquarie has implemented remediation actions to ensure that issues with monitoring for suspicious orders are escalated and actioned appropriately and is continuing to work on areas for further improvement.”
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