MDP hits Morisson Securities with penalty
Morrison Securities has paid a penalty of $330,000 to comply with an infringement notice given by the Markets Disciplinary Panel (MDP) for contravening the Australian Securities and Investment Commission (ASIC) Market Integrity Rules.
The firm was found to have contravened 5.9.1 of the ASIC Market Integrity Rules (Securities Markets) 2017 on six occasions in October 2021 and on one occasion in November 2021.
The rule requires a market participant “not to do anything which results in a market for securities not being fair and orderly”.
The MDP found that Morrison’s clients inadvertently directed orders to buy or sell securities to the Chi-X market, instead of the Australian Securities Exchange (ASX) closing and opening auctions.
The orders in all instances were were recognised by Morrison’s filters as aberrant orders and diverted to Morrison’s Designated Trading Representatives (DTR) for review.
Following this the DTR’s approved the six orders in October to the Chi-X market, which resulted in significant price variations in the relevant securities and, for five of the orders, set the closing price on the Chi-X market at a level that was materially different from the closing price on ASX.
The DTR also approved the first order to the Chi-X Market in November but rejected the second order, where the first order resulted in a significant price variation in the relevant security.
According to the MDP, the authorisation of the orders by Morrison resulted in the market for the relevant securities not being fair and orderly, in contravention of the Rules, and the orders caused significant price variations in the relevant securities that “were unreasonable in the circumstances and were not caused by ordinary market events”.
The MDP characterised Morrison’s conduct as at the high end of ‘careless’ and considered that human error by the DTRs, in conjunction with inadequate controls and systems, caused the relevant transactions to be made on the Chi-X Market instead of the ASX Market.
Additionally, the MDP considered that the consequences of the conduct were aggravating because the conduct permanently affected the closing prices, intraday ranges and volatility of the relevant securities and this had the potential to undermine the perception of the market as orderly.
“Although, the MDP did not consider that Morrison had a poor compliance culture overall, it noted that Morrison’s conduct indicated that speed of orders to the market was prioritised over taking due care to review aberrant orders,” it said in the press release.
“ The MDP observed that having DTRs manually review such a large volume of trades per day is not best industry practice.”
Stockbrokers, hey?