UBS Securities hit with $120,000 penalty

UBS Securities Australia Limited has paid a penalty totalling $120,000 to comply with an infringement notice given by the Markets Disciplinary Panel (MDP), the Australian Securities and Investments Commission (ASIC) said.

The regulator said that the MDP had reasonable grounds to believe that UBS contravened Rule 3.3.1(b) of the ASIC Market Integrity Rules (ASX Market) 2010.

The MDP found that a number of transactions in relation to six on-market buy-backs conducted by UBS on the ASX market in 2017 were “not in the ordinary course of trading and were not in accordance with the clients’ instructions”.

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The compliance with the infringement notice is not an admission of guilt or liability, ASIC said, and UBS is not taken to have contravened subsection 798H(1) of the Corporations Act. ASIC also said that the MDP accepted that there was no intention to contravene the market integrity rules.

The conduct neither caused financial loss to UBS’ clients or to third parties nor benefitted UBS beyond the brokerage that would otherwise have been received by UBS, the regulator said.

ASIC explained that UBS purchased approximately 18 million securities over a seven-month period in relation to the buy-backs in circumstances where UBS purchased the securities other than by the matching of orders on an order book. UBS reported the transactions to ASX as ‘Trades with Price Improvement’.

ASIC said that guidance for market integrity rules state that ‘Trades with Price Improvement’ are not in the ordinary course of trading and are not permitted for on-market buy-backs. The MDP considers that guidance to correctly reflect the law and prevailing market practice.

“The MDP considers that UBS’ conduct was careless. The traders that executed the trades did not know such trades were not in the ordinary course of trading. UBS’s internal training was not sufficient. UBS’ internal controls were not effective,” ASIC said.

“UBS has subsequently adopted remedial measures including conducting further training for the traders, updating the equities desk manual, and is implementing or developing trade monitoring enhancements.”


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