ASIC fines broker Macquarie (ASX:MQG) $126,000

The cash brokering entity of Macquarie Group Ltd (ASX: MQG), Macquarie Securities (Australia) Limited, has been fined $126,000. Here’s why.
The post ASIC fines broker Macquarie (ASX:MQG) $126,000 appeared first on The Motley Fool Australia. –

Man in business attire holding up red card to denote a fine

The cash brokering entity of Macquarie Group Ltd (ASX: MQG), Macquarie Securities (Australia) Limited, has paid a $126,000 fine to the Australian Securities and Investment Commission (ASIC).

The infringement notice was handed down yesterday after Macquarie Securities was found to have failed to follow its clients’ instructions during a share buy-back.

This is the fifth time ASIC has fined Macquarie Securities. Let’s take a closer look at what the brokering entity did.

Problematic preferencing

ASIC’s market disciplinary panel (MDP) announced yesterday that Macquarie Securities broke its rules by “entering into a market transaction that was not in accordance with [its] client’s instructions”.

According to the panel, Macquarie Securities purchased 1.2 million shares for $2.46 apiece on ASX Centre Point as part of a buy-back. It said that, in fulfilling the transaction, the company used a preferencing bid against its client’s wishes.

ASX Centre Point is a “dark market”, an anonymous mid-point matching system operated by the ASX. Traders on ASX Centre Point must place their orders in an order book where information on upcoming transactions is not publicly available before the orders are matched with trades.

In this instance, Macquarie Securities placed a preference on its client’s buy-back bid, meaning its order would be filled ahead of others. The preference resulted in the order being filled ahead of two priority sell orders.

However, the client’s instructions were to complete the buy-back during the “ordinary course of trading”. Therefore, Macquarie Securities’ preferencing of the ASX Centre Point order went against their wishes.

The ASIC panel described stated the company’s prioritisation of its buy-back orders as “careless”.

This is Macquarie Securities’ fifth fine from ASIC, although it’s the first time the watchdog has fined the company for not following its clients orders.

The broker isn’t the only entity to be caught up in poor behaviour during buy-back exercises.

Previously, the MDP has sanctioned UBS Securities Australia Ltd and Credit Suisse Equities (Australia) Ltd for their conduct during on-market buy-backs.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post ASIC fines broker Macquarie (ASX:MQG) $126,000 appeared first on The Motley Fool Australia.

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