ASIC has imposed additional conditions on the Australian financial services licence of OpenMarkets Australia Limited (OpenMarkets).
This action follows surveillance activities which identified concerns in OpenMarkets':
- arrangements for identifying and preventing potential market misconduct (for example, inadequate automated filters in its automated order processing (AOP) systems and ineffective pre-trade and post-trade monitoring arrangements);
- reconciliation of its client trust accounts; and
- supervisory arrangements and organisational and technological resourcing.
The licence conditions require OpenMarkets to appoint an independent expert to review the organisation's arrangements, identify any deficiencies, and recommend enhancements appropriate to the business. The independent expert will report to ASIC and OpenMarkets in March 2017.
ASIC Commissioner Cathie Armour said, 'Market participants have an important gatekeeper role. Those providing direct market access to clients should be vigilant in ensuring they maintain appropriate controls to ensure that trading messages do not interfere with the efficiency, fairness, order or integrity of the market. These controls include appropriate filters and a robust trade monitoring framework.'
ASIC acknowledges OpenMarkets' cooperative response and its engagement of an independent expert to commence the review.
Background
OpenMarkets is a Melbourne-based market participant trading on ASX, Chi-X, NSX and SIMVSE. It is also an ASX Clearing and Settlement Participant. OpenMarkets trades in equities, exchange traded funds (ETFs), exchange traded options (ETOs) and warrants.
OpenMarkets is licensed to provide personal and general advice to both wholesale and retail clients.
OpenMarkets offers AOP services to its clients. AOP enables orders to be registered in a market participant's system and then connected to a market automatically. This means client orders are directed to a market without being manually keyed in by a representative of the market participant.
ASIC's enquiries relating to potential market misconduct are continuing.