ABN AMRO Clearing Sydney has paid a US$222,000 penalty to comply with a violation notice issued by the Markets Disciplinary Panel (MDP).
The MDP noted that ABN AMRO registered block trades on the ASX24 market in the SPI 200 futures contract on three occasions in 2021, each containing split allotments below the minimum value threshold of 200 lots.
A block trading facility is a trading mechanism that allows market participants to arrange and settle orders of significant size over-the-counter. Rule 3.4.2(1) of the ASIC Market Integrity Rules (Futures Markets) 2017 (Rules) prohibits market participants from aggregating separate orders to meet the minimum value threshold for block trades.
Subsequently, the MDP had reasonable grounds to believe that ABN AMRO breached Subsection 798H(1) of the Corporations Act by failing to comply with Rule 3.4.2(1) of the Rules.
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The MDP noted that ABN AMRO’s operations team performed a minimum volume threshold check of the total of all relevant block trades. However, this check was not applied individually to each order within the relevant block trade to confirm that these individual orders also met or exceeded the minimum volume threshold requirement. This reflected ABN AMRO’s block trade checklist at the time, which did not provide for the need to check whether allocations for split orders were greater than or equal to the minimum value threshold.
The MDP also noted that ABN AMRO’s policy document dealing with block trades relies heavily on hyperlinks to the underlying commitments rather than providing important details about those commitments in the policy document itself.
The MDP considered that ABN AMRO’s conduct was negligent. It found that ABN AMRO conducted a compliance review and subsequently took corrective action in relation to the alleged violations.
In addition, the MDP recognized that, consistent with legislative reforms that increased the maximum penalties that can be specified in a violation notice for alleged violations of market integrity rules, the penalties imposed were significantly higher than what would have been imposed if the conduct according to the previous penal regime.
ASIC said, “Compliance with the infringement notice is not an admission of guilt or liability and ABN AMRO will not be deemed a violation of Subsection 798H(1) of the Corporations Act.”
In addition, the MDP assessed the consequences of the behavior as minor.
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