The Markets Disciplinary Panel (MDP) issued two notices to CommSec as it had reasonable grounds to believe the broker had contravened ASIC's Market Integrity Rules for both the ASX and Chi-X markets.
CommSec failed to issue "the required statement" for over 100,000 transactions that involved a crossing, and in over 50,000 transactions in which CommSec entered the trade as principal and not as the agent.
A crossing occurs “where a market participant acts for both the buyer and the seller in a transaction”, ASIC explained.
The MDP also had grounds to believe CommSec “did not have in place adequate organisational and technical procedures or controls” to verify that the name and address on an issuer sponsored holding matched that of the client who provided the instructions before the sale order was submitted.
CommSec was fined $400,000 for the disclosure failures and $300,000 for the lack of adequate procedures, and has also voluntarily refunded $1.1 million in brokerage to 25,000 clients.
Update: Commenting on the fines, CommSec managing director Paul Rayson said:
"We acknowledge and regret these process errors. There were no losses to customers and the errors have now been rectified. We notified relevant customers and no complaints or issues have been raised," he said.
"Our customer and regulatory responsibilities are of paramount importance, and we have worked collaboratively with ASIC on these matters since notifying the regulator in 2013.
"We are fully committed to providing secure and convenient services to our customers," Mr Rayson said.
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