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17-416MR Merrill Lynch Equities (Australia) Ltd pays $140,000 in infringement notice penalty
Merrill Lynch Equities (Australia) Limited ('MLEA') has paid a total penalty of $140,000 to comply with an infringement notice given to it by the Markets Disciplinary Panel ('the MDP').
The MDP found that between July 2014 and April 2016, MLEA:
- executed orders contrary to wholesale clients' instructions to opt out of the 'best execution' rule;
- failed to conduct adequate periodic reviews to ensure that it could comply with those instructions;
- failed to permit wholesale clients to opt out of its crossing systems by allowing trades to be executed on its crossing system; and
- entered into transactions on behalf of clients without instructions to do so.
These actions gave the MDP reasonable grounds to believe that MLEA contravened the ASIC Market Integrity Rules (Competition in Exchange Markets) 2011 and ASIC Market Integrity Rules (Chi-X Australia Market) 2011.
Despite ASIC issuing a 'Warning Letter' during that period, MLEA failed to undertake adequate remedial action to prevent ongoing breaches in relation to client instructions. This highlights the need for participants to ensure that their compliance reviews and remediation procedures and resources are appropriate for the size and complexity of the underlying business.
The MDP found that MLEA's conduct was careless and there was no suggestion that MLEA intended to mislead its clients.
MLEA's compliance with the infringement notice is not an admission of guilt or liability and MLEA is not taken to have contravened subsection 798H(1) of the Corporations Act 2001.