Following an investigation by the Australian Securities and Investments Commission (ASIC), the Markets Disciplinary Committee (MDP) has fined Macquarie Bank a record $4.995 million for failing to prevent the passage suspicious orders on the electricity futures market.
In a statement on Wednesday, the corporate regulator said Macquarie breached market integrity rules by allowing three of its clients to place suspicious orders up to 50 times, from January to September 2022 – a period of unprecedented volatility in global energy markets.
Each order had the characteristics of an intention to “mark the close”, meaning that each order was placed within the last minute of the market close, impacting the daily settlement price in a favorable direction. to the customer’s existing interest in this contract. According to ASIC, MDP found that Macquarie should have suspected that each of the 50 orders had been submitted with the intention of creating a false or misleading appearance in the market.
“The record penalty imposed by the CDM reflects serious, prolonged and potential systemic failures by Macquarie in its ability to detect and prevent alleged manipulation in the ASX 24 energy derivatives market. Macquarie is the largest player in the energy derivatives market and, given its gatekeeper role, must ensure that suspicious orders are not permitted in our markets,” ASIC Chairman Joe Longo said.
Longo shared this ASIC alerted Macquarie to suspicious orders placed by its customers on numerous occasions, and it “repeatedly failed” to take timely action to address its customers’ conduct and deficiencies in its supervisory capacity. Indeed, the regulator is said to have contacted Macquarie six times to alert it to ASIC’s concerns.
“The consequences of manipulating energy markets can have a negative impact on suppliers’ financing costs and, consequently, energy prices. This can lead to higher energy bills for consumers who are already struggling with the cost of living,” the president said.
The MDP found that Macquarie’s failure to address ASIC’s concerns in the context of the increased need to monitor the electricity futures market was an aggravating factor in determining the amount of the penalty.
Furthermore, the CDM concluded that Macquarie had failed to appreciate the seriousness of its obligations as a market participant to act promptly and appropriately in the face of obvious risks of deficiencies in its supervisory system and had failed to , at the time, assumed full responsibility for its surveillance system. to drive.
