Big bank’s record-breaking fine

One of Australia’s leading investment banks has been slapped with a record-breaking almost $5m fine by the financial watchdog after failing to prevent suspicious orders placed on the electricity futures market.

Macquarie Bank was ordered on Wednesday to pay a whopping $4.995m fine by the Australian Securities and Investments Commission’s Markets Disciplinary Panel (MDP) the highest penalty ever imposed by the panel.

The regulator alleged Macquarie Bank, the country’s fifth largest bank, breached market integrity rules on 50 occasions between January and September 2022 by permitting three separate clients to place suspicious orders.

Each of the orders was placed within the final minute before the markets closed, which ASIC said in a statement impacted the daily settlement price “in a direction favourable to the client’s existing interest in that contract”.

The MDP found the Australian-owned investment bank should have suspected each of the 50 orders were submitted with the intention of creating a false or misleading appearance in the market.

ASIC chair Joe Longo said the record penalty reflected the “serious, prolonged and potential systemic failures by Macquarie to detect and prevent suspected manipulation in the ASX 24 market for energy derivatives”.

“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,” Mr Longo said on Wednesday.

“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 said it had contacted Macquarie six separate times about its concerns, and the orders were placed during a period of “unprecedented volatility” in the energy markets following Russia’s invasion of Ukraine.

The panel found Macquarie had failed to “appreciate the seriousness of its obligations as a market participant to act promptly” upon what were “obvious risks” and had not “taken full ownership for its conduct.

In a statement obtained by Nine, Macquarie Bank acknowledged the fine and said it had paid the $4.995m penalty.

“The matter relates to trades made in 2022 by three commercial clients placing electricity futures orders electronically through our futures business,” the bank said.

“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.

“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.”