Australian Securities & Investments Commission Fines CLSA $144,300 for Failure to Provide Regulatory Data, Post-Trade Confirmations & Off-Market Transactions
9th September 2024 | Hong Kong
The Australian Securities & Investments Commission (ASIC) has fined CLSA $144,300 for failure to provide regulatory data, post-trade confirmations & off-market transactions. ASIC (29/8/24): “CLSA Australia Pty Limited has paid a penalty of $144,300 to comply with an infringement notice given by the Markets Disciplinary Panel (MDP) for failing to provide correct regulatory data to the relevant Market Operator. The MDP also had reasonable grounds to believe that CLSA failed to give post trade confirmations to its clients and immediately report off-market transactions. Providing accurate regulatory data is a core obligation of market participants as that data is used by ASIC to carry out its mandated function of supervising and ensuring the integrity of the market. It enables ASIC to detect market misconduct and analyse market structure and trends. CLSA inadvertently distorted the data provided to the market operator, potentially hindering ASIC’s market surveillance capabilities. The MDP considered that from 23 September 2022 to 3 February 2023, CLSA contravened Rule 7.4.2(1) and Rule 7.4.2(2) by incorrectly tagging Orders as agency instead of principal on 9,243 occasions and Trade Reports on 27 occasions. By tagging Orders and Trade Reports as agency instead of principal, CLSA represented that they were conducted on behalf of its clients when in fact they were conducted on CLSA’s own behalf, thus giving incorrect information about the origin of those Orders and Trades. The regulatory data failures arose from a planned system change to CLSA’s global order management system. The MDP were concerned this system change was not adequately scoped and tested before implementation to capture potential unintended impacts in other jurisdictions. The establishment and maintenance of technology systems is a fundamental responsibility of a market participant and although the inaccurate reporting resulted from an inadvertent error, the MDP considered changes made to CLSA systems without appreciation of the global impact was a ‘serious oversight.’ The MDP considered that global participants need to be mindful that changes in one market may have implications for other markets where they operate. They need to identify these implications and engage with local market participants, such as Australian market participants, to ensure any changes they make do not have adverse flow on effects that may cause the local participants to breach their obligations. The MDP further considered that CLSA contravened Rule 3.4.1 on 27 occasions by failing to give post trade notifications to its clients and that CLSA contravened Rule 6.3.1(2)(1)(a) by failing to immediately report a pair of Block Trades after their execution, taking 25 minutes to report them. Compliance with the infringement notice is not an admission of guilt or liability, and by doing so CLSA is not taken to have contravened subsection 798H(1) of the Corporations Act. View the infringement notice on the Markets Disciplinary Panel Outcomes Register. Background – CLSA is a market participant of markets operated by ASX Limited and Cboe Australia Limited. On 16 January 2023, CLSA reported two Block Trades, also known as Special Crossings, that generated volume alerts on ASIC’s surveillance systems. As a result of ASIC enquiries, it became apparent that a technology change to CLSA’s global order management systems (Cobra) was causing the default tagging of facilitation orders to change from “Principal” to “Agency” (Cobra Tagging Issue). The Cobra Tagging Issue also resulted in CLSA not providing post trade confirmations to clients in some circumstances. Unrelated to the Cobra Tagging Issue, the Special Crossings, the subject of the initial enquiries, were executed at around 11.57 am but not reported to the market until approximately 12.24 pm.”
“ Australian Securities & Investments Commission Fines CLSA $144,300 for Failure to Provide Regulatory Data, Post-Trade Confirmations & Off-Market Transactions “
Australian Securities & Investments Commission Fines CLSA $144,300 for Failure to Provide Regulatory Data, Post-Trade Confirmations & Off-Market Transactions
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