The corporate watchdog has fined Macquarie Bank a record $5 million for its “serious, prolonged and potentially systemic failures” to prevent suspicious bets being placed on the electricity futures market during the start of the Ukraine war.
The Australian Securities and Investments Commission found the bank, which is the largest participant in the ASX24 electricity futures market, breached market integrity rules 50 times between January and September 2022 by allowing three of its clients to place suspicious orders with the intention of creating a false or misleading appearance in the market.
ASIC contacted Macquarie six times to warn the bank about its concerns, which occurred during a volatile period in the energy market after Russia invaded Ukraine.
“The record penalty imposed by the MDP reflects the serious, prolonged and potential systemic failures by Macquarie to detect and prevent suspected manipulation in the ASX 24 market for energy derivatives. Macquarie is the largest market participant in energy derivatives and given its role as a gatekeeper, it must ensure suspicious orders are not permitted to be placed on our markets,” ASIC chair Joe Longo said.
“The consequences of manipulating energy markets can have a detrimental flow on impact to supplier funding costs, and in turn energy prices. This can lead to higher energy bills for consumers who are already struggling with the cost of living.”
ASIC’s investigation found the suspicious orders were placed within the last minute of the market closing, affecting the daily settlement price in favour of the person’s existing interest in that contract.
Those on the other side of the price movement can be exposed to reduced notional profits, which could lead to higher prices for consumers.
In a statement, a Macquarie spokeswoman said the bank had paid the $4.995 million penalty.
“Macquarie takes full responsibility for all aspects, particularly given its important role as gatekeeper and the largest market participant facilitating clients’ activity in electricity futures in Australia and New Zealand,” the spokeswoman said.
“Macquarie has implemented remediation actions to ensure that issues with monitoring for suspicious orders are escalated and actioned appropriately and is continuing to work on areas for further improvement.”
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