In a statement, ASIC said its Markets Disciplinary Panel (MDP) had issued the fine to Credit Suisse after finding it had contravened Rule 3.3.1(b) of the ASIC Market Integrity Rules by failing to act in accordance with client instructions.
The panel found that from 6 March 2017 to 8 November 2018, Credit Suisse 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.
Credit Suisse had been engaged as a broker to conduct an on-market buy-back of shares on behalf of the three clients, however it had reported the trades to the ASX as trades with price improvement (NXXT trades).
ASIC Regulatory Guides 223 and 265 state that an NXXT trade is not in the ordinary course of trading and is not a transaction permitted for an on-market buy-back.
"The MDP considered that Credit Suisse had failed to act in accordance with its clients’ instructions to conduct an on-market buy-back when it had entered the NXXT trades," ASIC said.
"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 during an on-market buy-back. Additionally, Credit Suisse’s surveillance systems had also failed to prevent the NXXT trades from being executed."
However, the regulator also noted the firm had self reported the breaches to ASIC and taken remedial measures by contacting its clients about the NXXT trades, conducting further training for its execution desk employees, updating the reminder emails sent to execution desk employees not to execute NXXT trades during an on-market buy-back, and implementing further processes to review certain trades, including NXXT trades.
