Discipline down under: Australian day trader gets two years porridge


Australia has become a very well regarded nation in which to conduct electronic trading, due to its stable economy and well organized financial markets structure, but also due to its strict national regulator, the Australian Securities and Investments Commission (ASIC).

Today, Kristoffer John Watts, a day trader from Casuarina, New South Wales, has felt the long arm of the law due to his creation of a false or misleading appearance in the market when trading contracts for difference (CFDs) in the corporate stock of Austpac Resources NL and Smarttrans Holdings Ltd between September 22, 2011 and March 27, 2012.

The CFDs were traded through a Direct Market Access (DMA) account. Under this DMA model, the CFD issuer hedges its exposure to a client’s trading position which results in an equivalent position being taken in the underlying security on the ASX.

Mr. Watts appeared in Queensland District Court in Brisbane yesterday and was sentenced to two years in jail, with twenty one months of the sentence suspended, therefore being committed to three months actual incarceration.

Australia’s regulatory authorities have made it clear during recent annual enforcement reports that whilst Australia welcomes the use of high technology and algorithms, dark pools and other modern methods of gaining an edge when trading, manipulation or false reporting will not be tolerated, with ASIC having stated that it will concentrate considerable effort in eradicating insider trading, a practice which is handled by the criminal court, and the fixing of benchmarks.

In her sentencing remarks, her Honour Judge McGinness said, “Those participating in the market have a right to be protected from this sort of market manipulation.” ASIC Commissioner Cathie Armour said, “One of ASIC’s priorities is fair and efficient markets and where misconduct occurs ASIC will take appropriate action.”

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Discipline down under: Australian day trader gets two years porridge

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