Published On: Fri, Nov 8th, 2013

ASIC Fines UBS A$50,000

Greg Medcraft ASIC chairman

Greg Medcraft ASIC chairman

On October 22, ASIC announced that UBS Securities Australia Limited (UBS) had paid a penalty of $50,000 to comply with an infringement notice given to it by the MDP. The penalty was for conduct which resulted in a market for a put option not being both fair and orderly.

As a result of the incorrect keying in of a price as $0.115 instead of $1.115, the MDP had reasonable grounds to believe that UBS had contravened Rule 5.9.1 of the ASIC Market Integrity Rules (ASX Market) 2010, and thereby contravened section 798H(1) of the Corporations Act 2001 (Corporations Act).

The MDP issued UBS with an infringement notice specifying a penalty of $50,000. Consistent with guidance provided in ASIC Regulatory Guide 216 Markets Disciplinary Panel (RG 216), the MDP took various factors into consideration, including that:
• MIR 5.9.1 is aimed at ensuring a fair, open and transparent trading system, with a strict obligation imposed on Market Participants not to do anything which results in a market for a Product not being both fair and orderly;
• The breach was inadvertent on the part of UBS as the UBS DTR failed to properly exercise his functions to the requisite high standard when he incorrectly keyed the price as $0.115 instead of $1.115 and entered the second part of the Relevant Order into the ASX Trading Platform;
• The MDP noted that in this matter the UBS DTR did not receive any price variation warning messages or alerts. Notwithstanding this, an important aspect of the role of the DTR is to pay proper attention and diligence to prevent the entry of Orders into the Trading Platform that could result in a market that is not both fair and orderly. This is a critical measure in maintaining the integrity of a market;
• UBS took remedial measures to prevent recurrence of the breach;
• UBS has previously been sanctioned by the ASX Disciplinary Tribunal regarding the predecessor rule to MIR 5.9.1 and involving a DTR (ASX Circular 431/09 dated 3 December 2009), and has also recently been sanctioned by the MDP regarding a DTR in breach of MIR 5.9.1, (MDP Circular 2013–4 dated 18 July 2013)
• UBS cooperated with ASIC throughout its investigation and did not dispute any material facts; and
• UBS agreed not to contest the matter, thereby saving time and costs that would otherwise have been expended.

Further details of the background of this matter are in MDP Circular 2013/07.

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