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Tuesday 12 September 2017

17-311MR Merrill Lynch (Australia) Futures pays $60,000 in infringement notice penalty

Merrill Lynch (Australia) Futures Limited (“MLAF”) has paid a penalty of $60,000 to comply with an infringement notice given to it by the Markets Disciplinary Panel (“the MDP”).

The ASIC Market Integrity Rules (ASX 24 Market) 2010 requires market participants to demonstrate prudent risk management procedures in relation to their futures trading, including to set and document appropriate order limits and maximum price change limits.

The MDP found that, from October 2010 to June 2016, MLAF had inappropriate limits to varying degrees in respect of number of pathways to the ASX 24 Market. The limits were considered to be inappropriate because they were set at ASX 24 Market default levels. For some of the pathways, the inappropriate default limits were set at both the downstream terminals level and at the upstream order system level.

While the MDP considered MLAF to have been careless in failing to identify the inappropriateness of the limits over a period of almost six years, it noted that MLAF undertook a compliance review of its market limits on both its downstream terminals and upstream order systems in 2016, following the growth of its business, and promptly took steps to remedy the issue once MLAF became aware of it.

Download the infringement notice

The compliance with the infringement notice is not an admission of guilt or liability, and MLAF is not taken to have contravened subsection 798H(1) of the Corporations Act.