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22-002MR BGC Partners pays $110,250 infringement notice
BGC Partners (Australia) Pty Ltd has paid a penalty of $110,250 to comply with an infringement notice given by the Markets Disciplinary Panel.
The Markets Disciplinary Panel found that, on two occasions on 22 March 2019, BGC Partners transacted pre-negotiated business orders on the ASX 24 market without making the required enquiry through the trading platform’s message facility. The Markets Disciplinary Panel noted that there had been previous compliance failures of this type by BGC Partners.
The Markets Disciplinary Panel found that BGC Partners’ failure to make the required enquiry appeared to be the result of unintentional operator error and that it was likely this error could have been avoided if BGC Partners had updated its systems to incorporate enhanced technological safeguards. The Markets Disciplinary Panel considered that although enhanced technological safeguards may not be required where a compliance system is functioning properly, BGC Partners should have upgraded its compliance processes to include appropriate technological safeguards given its previous compliance failures.
As a result, the Markets Disciplinary Panel had reasonable grounds to believe that BGC Partners contravened subsection 798H(1) of the Corporations Act 2001 by failing to comply with Rule 3.3.1A(1) of the ASIC Market Integrity Rules (Futures Markets) 2017.
Compliance with the infringement notice is not an admission of guilt or liability, and BGC Partners is not taken to have contravened subsection 798H(1) of the Corporations Act.
Rule 3.3.1A(1) of the ASIC Market Integrity Rules (Futures Markets) 2017 deals with pre-negotiated business orders in the ASX 24 futures market and the FEX futures market. In circumstances where a market participant has written authority from a client to engage in pre-negotiated business on behalf of the client, the participant is permitted to withhold the implementation of instructions from the client in order to solicit instructions from other clients. Where the participant seeks to execute pre-negotiated business on the market, the rule requires the participant to make an enquiry through the message facility of the market, wait until 30 seconds has elapsed and then enter the matching orders that reflect the pre-negotiated business for execution on the market.
The purpose of the rule is to strike a balance between facilitating pre-negotiated business and ensuring a fair, open and transparent trading system by requiring market participants to give others notice of intention to trade.