A release by ASIC said institutional trader D2MX, part of the listed MDS Financial Group, had failed to ensure its automated order processing (AOP) system had the appropriate organisational and technical resources in place, including a ‘price movement for last’ automated filter and processes to record any changes to the automated filters.
This interfered with the “efficiency and integrity of the ASX market and the proper functioning of the trading platform”, ASIC said in the release.
D2MX had deactivated the ‘price movement from last’ AOP filter for one of its clients which allowed an erroneous order to enter the trading platform.
The Markets Disciplinary Panel found D2MX had contravened MIR 5.6.3(a) and MIR 5.9.1 of the market integrity rules and therefore also breached section 798H(1) of the Corporations Act 2001.
MIR 5.6.3(a) is aimed at promoting confidence in the integrity of the market and ensuring trading participants have “appropriate filters, filter parameters and processes to record any changes to filters or filter parameters” while MIR 5.9.1 is aimed at promoting confidence in the integrity of the market.
“If, for whatever reason appropriate automated filters are deactivated or otherwise unavailable, then a trading participant’s system must not be used for AOP, instead orders should be submitted for entry into the trading platform through a designated trading representative or not be submitted at all,” said ASIC in the release.
