Merrill Lynch Equities (Australia) Limited pays $96,000 infringement notice penalty 

The Australian Securities and Investments Commission has ruled a fine against Merrill Lynch Equities (Australia) Limited (Merrill Lynch). The company has paid a total penalty of $96,000 to comply with an infringement notice given to it by the Markets Disciplinary Panel (MDP).

The penalty was for failing to have in place an appropriate automated price filter in relation to Automated Order Processing for one client account, which interfered with the efficiency and integrity of the ASX market, and also for failing to prevent the entry into the ASX Trading Platform of an erroneous order which resulted in a market for Class A non-voting common stock in News Corporation Inc., not being both fair and orderly.

By reason of Merrill Lynch’s entry of the Relevant Order into the ASX Trading Platform on 28 February 2012, the MDP had reasonable grounds to believe that Merrill Lynch contravened Rules 5.6.1 and 5.9.1 of the ASIC Market Integrity Rules (ASX Market) 2010 (MIR 5.6.1 and MIR 5.9.1), and thereby contravened subsection 798H(1) of the Corporations Act 2001 (Corporations Act) which requires compliance with the market integrity rules. The MDP issued Merrill Lynch with an infringement notice specifying a total penalty of $96,000, comprised as follows:

• MIR 5.6.1 – $56,000, and
• MIR 5.9.1 – $40,000.

 

MIR 5.6.1 provides:

A Trading Participant which uses its system for Automated Order Processing must at all times:
(a) have appropriate automated filters, in relation to Automated Order Processing; and
(b) ensure that such use does not interfere with:
(i) the efficiency and integrity of the Market; or
(ii) the proper functioning of any Trading Platform.

MIR 5.9.1 provides:

A Market Participant must not do anything which results in a market for a Product not being both fair and orderly, or fail to do anything where that failure has that effect.

Source: ASIC

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