Failures see ASIC hit Macquarie Bank with license | Australian Markets

The Australian Securities and Investments Commission (ASIC) has imposed further situations on Macquarie Bank’s Australian Financial Services License over what it calls important compliance failures – “some going undetected for many years and one for a decade”.

The regulator mentioned the compliance failures relate to Macquarie’s futures dealing business and its over-the-counter (OTC) derivatives trade reporting.

The further licence situations will require Macquarie to:

• put together a remediation plan to deal with the failures of their futures dealing business and OTC derivatives trade reporting capabilities and their root causes
• appoint an impartial knowledgeable to review and report on the adequacy of Macquarie’s remediation plan to deal with the failures and their root causes, and
• have the impartial knowledgeable assess the operational effectiveness of Macquarie’s remediation actions to stop, detect and reply to comparable points occurring in its futures dealing and OTC derivatives companies sooner or later.

ASIC Commissioner Simone Constant mentioned, “Our intervention underscores our concern with the recurrent nature of Macquarie’s failures, which were caused by ineffective supervision and weak compliance and control management.”

The control weaknesses ranged from poor change management practices, unclear roles and obligations, and an incomplete understanding of its own processes and controls, together with round information governance.

“The additional licence conditions are a significant administrative action to ensure Macquarie comprehensively addresses ASIC’s concerns. It cannot be a piece-meal or band-aid fix,” Constance mentioned

“Macquarie must take responsibility and put in place appropriate action to remediate the repeated failures and underlying governance and supervisory failures.”

“We were particularly disappointed that Macquarie failed to prevent 11 suspicious orders being placed on the electricity futures market via Macquarie terminals shortly after ASIC had referred similar failures to the Markets Disciplinary Panel which fined the bank just under $5 million.”

ASIC’s administrative motion follows the identification or reporting of 9 market conduct issues of concern within the final 18 months – seven issues referring to misreporting of more than 375,000 OTC spinoff transactions, and two futures dealing issues in regards to the prevention and detection of suspicious trading exercise and the withholding of orders on the ASX24 market.