ASIC hits Macquarie with additional licence conditions over futures, OTC compliance
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The news: The Australian Securities and Investments Commission (ASIC) has imposed additional conditions on Macquarie Bank’s financial services licence after multiple and significant compliance failures.
The context: ASIC said the compliance failures related to the bank’s futures dealing business and its over-the-counter (OTC) derivatives trade reporting. Some of the failures, it said, went undetected for many years and one for a decade.
The regulator said the failures were caused by ineffective supervision and weak compliance and control management. These included poor change management practices, unclear roles and responsibilities, and an incomplete understanding of its own processes and controls, including around data governance.
The additional licence conditions require Macquarie to:
- Prepare a remediation plan to address the failures in their futures dealing business and OTC derivatives trade reporting functions and their root causes;
- Appoint an independent expert to review and report on the adequacy of Macquarie’s remediation plan to address the failures and their root causes; and
- Have the independent expert assess the operational effectiveness of Macquarie’s remediation activities to prevent, detect and respond to similar issues occurring in its futures dealing and OTC derivatives businesses in the future.
ASIC said the administrative action followed nine market conduct matters over the last 18 months, with seven relating to misreporting of more than 375,000 OTC derivative transactions and two future dealing matters involving suspicious trading activity and the withholding of orders on the ASX24.
Last year, Macquarie was fined $5 million for failing to prevent suspicious orders being placed on the electricity futures market.
What they said: ASIC commissioner Simone Constant said: “The additional licence conditions are a significant administrative action to ensure Macquarie comprehensively addresses ASIC’s concerns. It cannot be a piece-meal or band-aid fix.
“We were particularly disappointed that Macquarie failed to prevent 11 suspicious orders being placed on the electricity futures market via Macquarie terminals shortly after ASIC had referred similar failures to the Markets Disciplinary Panel which fined the bank just under $5 million.”
The source: ASIC media release
