The Australian Securities and Investment Commission (ASIC) has announced that Macquarie Securities (Australia) Limited (‘MSAL’) has paid a penalty of $126,000 to comply with an infringement notice served upon it by the Markets Disciplinary panel.
This infringement notice was issued due to its action during a buy-back of shares for an ASX-listed company as it was not in accordance with the instructions of its client.
A market buy-back of shares means that the entity would be buying back its own shares at the market price in the ordinary course of trading. This would ensure a level playing field and would also ensure that other market participants would not be affected by this transaction. So, the client had specifically instructed MSAL to do the buy-back from the market.
But MSAL went ahead and did a part of the buy-back from ASX Centre Point, which is a kind of dark pool where the orders that are present in the books can be seen by the other market participants only after the orders are matched as trades. They also ensured that their orders would have higher preference as compared to the orders of the other market participants.
Considering that both these actions were in contravention to the specific instructions of the client and completing the buy-back using methods that are not in ordinary course of trading, the MDP ruled that MSAL was in infringement and hence decided to levy a penalty.
The actions of MSAL meant that two orders of another market participant did not get priority though they were placed ahead of time than the order of MSAL.
This is the first matter considered by the MDP under the new penalty regime that came into force for conduct that happened after 13 March 2019. The ASIC believes that such high penalties even for minor infringements would act as a deterrent in the future for other entities as well.
The ASIC has been very strict in its regulatory action over the last couple of years and it also makes sure that it advertises all its actions highly so that it not only acts s a deterrent but also serves as reminder for normal users to be able to understand the kind of activities that financial firms engage in so that they are aware the next time when they engage with such a firm. This improved awareness, over time, would be useful for the overall health of the financial sector.