Macquarie Bank has followed its rivals and entered into so-called enforceable undertakings with the Australian Securities and Investments Commission (ASIC) regarding the conduct of its wholesale spot foreign exchange businesses. The bank has agreed to oversight and operational changes after its FX traders shared confidential information of customers’ trade information and traded to benefit themselves.
An enforceable undertaking is an Australian legal device that is sometimes used as an alternative to civil action by the country’s watchdog.
The undertakings include ASIC appointing an independent expert to oversee changes to systems, controls, training, guidance and framework for monitoring and supervising traders, plus senior executives reporting to the regulator for three years.
The bank will also make a community benefit payment of $2 million to The Smith Family, a not-profit organisation that aims to improve young people’s understanding of money management.
Friday’s agreement arose from an investigation of incidents between 1 January 2008 and 30 June 2013, during which it was found that the bank failed to “ensure its systems and controls were adequate to address risks relating to instances of inappropriate conduct identified by ASIC”, according to a statement on the watchdog’s website.
The settlement with Macquarie Bank comes as part of in their foreign exchange divisions. Several big banks in Australia undertook similar undertakings with the nation’s financial regulator and each paid decent monies to the financial literacy fund for similar breaches.
Specifically, the regulator found that employees of Macquarie had on several occasions revealed confidential details of customers’ pending orders to outside traders, as well as disclosing identification of a client.
Macquarie’s FX traders also tried to trigger stop loss orders when the market approached the trigger price by trading in a manner intended to cause a stop out for those positions.
ASIC finally noted: “On a number of occasions, Macquarie employees inappropriately disclosed to external third parties confidential and potentially material information about Macquarie’s trading activity associated with large pending AUD orders.”
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