CLSA Australia Fine Amount: $144,300 (AUD)
Date: 29 August 2024
Violation Period: September 2022 - January 2023
Primary Violation: Trade Reporting Errors
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.
CLSA's regulatory reporting and trade processing violations occurred across three main areas:
27 trade reports were incorrectly tagged as "agency" instead of "principal."
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."
CLSA failed to:
Adequately scope the system change
Test for impacts in other jurisdictions
Consider how global changes might affect local obligations
Engage with local market participants about potential impacts
27 instances where post-trade notifications were not provided to clients.
This was connected to the system tagging issue.
Specific incident on January 16, 2023.
Two block trades executed at 11:57 AM were not reported until 12:24 PM, representing a ~25-minute delay in reporting.
The incorrect data potentially hindered ASIC's market surveillance capabilities and distorted the market operator's data.
$144,300 (AUD) to comply with the infringement notice.
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.'"
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."
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."
ASIC - Press Release - CLSA pays penalty for providing incorrect regulatory data
ASIC - MDP03/24, Thursday 29 August 2024 - Markets Disciplinary Panel: Infringement Notice