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Screenshot of a breaking news alert e-mail from Q2 2017
Australia financial regulator ASIC has announced that Credit Suisse Equities (Australia) Limited, an Australian unit of global banking firm Credit Suisse Group AG (ADR) (NYSE:CS) has paid a penalty of AUD $170,000 to comply with an infringement notice from ASIC’s Markets Disciplinary Panel (MDP).
The MDP had reasonable grounds to believe that Credit Suisse had contravened subsection 798H(1) of the Corporations Act 2001 (Cth) by failing to comply with Rule 5.6.1(1) of the ASIC Market Integrity Rules (ASX Market) 2010. This Rule requires trading participants to have appropriate automated filters for their automated order processing (AOP) systems.
In April 2016, a client of Credit Suisse mistakenly entered some orders in relation to options market contracts via the AOP system that referenced an incorrect limit price. As a result, a number of transactions took place at prices that were 96% below the extreme trade range reference price for those products. The orders were cancelled soon after entry.
The MDP commented that the orders were allowed to go through to the market because Credit Suisse did not have filters in place to determine limit price appropriateness for these kinds of options market contracts. Credit Suisse failed to have such filters in place for a period of more than five years, during which time approximately 9,800 orders for option market contracts were entered through its AOP system.
While the conduct in April that brought the matter to Credit Suisse’s attention was the result of an isolated incident, the MDP noted that underlying deficiencies had existed for an unacceptable period of time. Further, the MDP noted that it had made past findings in relation to filter deficiencies of Credit Suisse and emphasised that repeat conduct of the same or similar kind is likely to result in higher penalties being specified in infringement notices.
The compliance with the infringement notice is not an admission of guilt or liability, and Credit Suisse is not taken to have contravened subsection 798H(1) of the Corporations Act.
A copy of the infringement notice can be downloaded here (pdf).