The penalty relates to a trade of 1,800 units of a Betashares gold exchange traded fund (ETF) in December 2011, according to a statement from the Australian Securities and Investments Commission (ASIC).
Despite the last traded price of the Australian dollar hedged Betashares Gold Bullion ETF (market ticker QAU) being $15.75, UBS submitted an order for a client to sell the shares at $0.165 at a total value of $297 and involved one market participant as counterparty, ASIC stated.
The order resulted in a 99 per cent price decrease in QAU and came despite triggering a UBS-automated order processing filter being auto routed to a designated trading representative (DTR) for authorisation, according to ASIC.
“The DTR authorised the relevant order despite the receipt of two warning messages and despite the last traded price of QAU being $15.75 because the DTR misapplied a decimal point in the relevant order versus the last traded price, in the belief that it was at an appropriate price,” ASIC stated.
“The relevant order was then submitted into the trading platform by UBS, notwithstanding that the reference price for QAU was the previous trading day’s closing price of $15.75.”
ASIC said UBS then requested that the Australian Securities Exchange (ASX) cancel the two transactions and the ASX subsequently directed the cancellation of the two market transactions that impacted one counterparty market participant.
ASIC said the MDP had reasonable grounds to believe that UBS contravened ASIC’s market integrity rules and the Corporations Act, resulting in the MDP issuing UBS with an infringement notice specifying a penalty of $30,000.
The MDP noted the conduct appeared to have been inadvertent on the part of the UBS DTR, rather than deliberate or reckless, and the DTR was experienced with no history of previous errors.
ASIC said UBS since undertook remedial measures to prevent recurrence, including training of its DTRs and updating its client order configuration to avoid human error.
The MDP also noted that UBS cooperated with ASIC throughout its investigation and did not dispute any material facts, and agreed not to contest the matter, thereby saving time and costs that would otherwise have been expended.
However, the MDP also noted UBS did not self-report the matter, having formed the view the breach was not significant. It also noted UBS did not derive any benefit from the contravention, or cause any damage to a third party.
