ASX Disciplinary Tribunal Circular – BGC Partners (Australia) Pty Limited
The ASX Disciplinary Tribunal (the ‘Tribunal’) has determined the following:
BGC Partners (Australia) Pty Limited (‘BGC’) contravened the following Operating Rules of the Sydney Futures Exchange* (the ‘Operating Rules’):
• Rule 3.1.1(a)(ii) (‘Expressions of Interest’) on three occasions; and
• Rule 3.3.5(a) (‘Request for Quote’) on eight occasions;
• Rule 3.2.2(b) (‘Strategy Trades’) on two occasions; and
• Rule 3.1.16(b) (‘Acting in Accordance with Client Instructions and Client’s Best Interest’) on one occasion.
The contravening conduct occurred between 18 and 26 March 2009. All of the contraventions related to trading in the Sydney Future Exchange (the ‘Exchange’) energy market.
BGC did not contest the contraventions before the Tribunal. The Tribunal imposed a total fine of $60,000 (plus GST) and determined that BGC implement an education program pursuant to which BGC undertakes training on the receipt and management of client orders in relation to the energy market.
The circumstances of the matter are detailed as follows:
Expressions of Interest contraventions
On three occasions (on 19, 20 and 25 March 2009) BGC received Expressions of Interest from a client in relation to certain energy market Strategy Trades. BGC contravened Operating Rule 3.1.1(a)(ii) (Expressions of Interest) on each of these three occasions in that it failed to make the necessary enquiry via the Trading Platform ‘Message’ facility upon receipt of the Expression of Interest from its client prior to commencing negotiations with other parties in respect of the Strategy Trades.
Request for Quote contraventions
On eight occasions (on 18, 19, 20, 25 and 26 March 2009) BGC executed pre-negotiated business orders for Strategy Trades for a number of clients, following the transmission of Request for Quote Messages pursuant to Operating Rule 3.3.5(a) (Procedures prior to Order Entry on the Trading Platform). On each occasion BGC contravened Rule 3.3.5(a) in that it failed to include the ratio of Option Contracts to the Futures Contracts the subject of the Strategy Trades in the Request for Quote Message, which is a requirement of Procedure 3.3 promulgated under that Rule.
Strategy Trade contraventions
On two occasions (on 18 and 26 March 2009), BGC executed pre-negotiated business orders for an Option Strategy involving Option Contracts and Futures Contracts. When allocating the resulting contracts comprising the Option Strategy Trade to the relevant clients, BGC contravened Operating Rule 3.2.2 (b) (Strategy Trades) in that it did not allocate each leg of the Strategy Trade to the same account; but instead allocated the different legs to the accounts of different clients.