Credit Suisse Equities has paid a penalty of $75,000 to comply with an infringement notice by the Markets Disciplinary Panel (MDP).
The MDP said it had reasonable grounds to believe Credit Suisse had contravened Australian Securities Exchange (ASX) Rule 3.3.1(b) of the ASIC Market Integrity Rules (ASX Market) 2010 by failing to act in accordance with its clients’ instructions.
Credit Suisse was engaged as a broker to conduct an on-market buy-back of shares on behalf of three clients.
The MDP was satisfied from 6 March, 2017, to 8 November, 2018, entered into a number of trades by matching orders on behalf of both its buying and selling clients rather than by the matching of orders on an order book, which Credit Suisse reported to the ASX as “trades with price improvement” (NXXT trades).
NXXT trades were not in the ordinary course of trading and was not a transaction permitted for an on-market buy-back, according to Australian Securities and Investments Commission (ASIC) Regulatory Guide (RG) 223 and the superseding RG 265.
The MDP considered Credit Suisse’s conduct to be careless because its execution desk employees were inadequately trained in relation to on-market buy-backs and were therefore unaware that NXXt trades were not permitted and the firm’s surveillance systems had also failed to prevent the trades from being executed.
Credit Suisse reported the NXXT trades to ASIC and took remedial measures including contacting clients and conducting further employee training.
The MDP said it was satisfied that Credit Suisse did not appear to derive any benefit from the conduct beyond brokerage fees and commissions, and that it did not cause financial loss to clients or third parties.