Quick facts
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CLSA Australia Fine Amount: $144,300 (AUD)
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Date: 29 August 2024
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Violation Period: September 2022 - January 2023
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Primary Violation: Trade Reporting Errors
CLSA Australia Fine Overview
The Markets Disciplinary Panel (MDP) has issued an infringement notice to CLSA Australia Pty Limited for multiple regulatory reporting and trade processing violations. The primary issues stemmed from incorrectly tagging orders as agency instead of principal trades, failing to provide timely post-trade confirmations, and delayed reporting of block trades.
Details of the CLSA Australia Fine
CLSA's regulatory reporting and trade processing violations occurred across three main areas:
Order Tagging Errors
- 9,243 orders were incorrectly tagged as "agency" instead of "principal" (CLSA trading for itself).
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27 trade reports were incorrectly tagged as "agency" instead of "principal."
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The root cause was changes to CLSA's global order management system (Cobra). The change caused the default tagging of facilitation orders to switch from "principal" to "agency."
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CLSA failed to:
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Adequately scope the system change
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Test for impacts in other jurisdictions
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Consider how global changes might affect local obligations
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Engage with local market participants about potential impacts
Post-Trade Notification Failures
Block Trade Reporting Delay
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Specific incident on January 16, 2023.
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Two block trades executed at 11:57 AM were not reported until 12:24 PM, representing a ~25-minute delay in reporting.
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The incorrect data potentially hindered ASIC's market surveillance capabilities and distorted the market operator's data.
CLSA Australia Fines and Penalties
Select Quotes
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On System Changes: "The establishment and maintenance of technology systems is a fundamental responsibility of a market participant and although the inaccurate reporting resulted from an inadvertent error, the MDP considered changes made to CLSA systems without appreciation of the global impact was a 'serious oversight.'"
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On Global Operations: "Global participants need to be mindful that changes in one market may have implications for other markets where they operate. They need to identify these implications and engage with local market participants."
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On Data Accuracy: "Providing accurate regulatory data is a core obligation of market participants as that data is used by ASIC to carry out its mandated function of supervising and ensuring the integrity of the market."
Sources
