ASIC on trail of mystery trades

On October 18 a series of unusual transactions caused share prices of more than eight blue‑chip stocks to surge seconds after trading began at 10am. A trade that had been reported as $200 million was revised to $56 million seconds before the market opened, creating about a $144 million change and sparking questions about market integrity. The corporate regulator, ASIC, launched an inquiry because the opening‑auction distortions affected individual share prices and the value of ASX 200‑based ETFs.

The article named several affected blue‑chip stocks, including ANZ, Commonwealth Bank, Brambles, AGL, Bank of Queensland, Ansell and Aristocrat. The spike also inflated the opening price of securities used to calculate ASX 200 exchange‑traded funds listed as XJO, and the ASX 200 Futures Index briefly rose above 4600.

ASIC said it has ruled out a dysfunctional algorithm or high‑frequency trading strategies as the cause of the spike. However, the regulator has not ruled out market manipulation and continues its inquiry.

ASIC found large volume sell orders for the opening auction were placed through a single broker, and then volumes of those sell orders were reduced immediately before the start of the auction for securities in the A‑B rotation. That late reduction in sell volume caused several securities to trade in the auction at prices significantly higher than the previous day’s close, which in turn inflated opening prices and ETF values.

ASIC did not publicly name the broker, but its update said the questionable orders were placed through the same broker—believed to be UBS on behalf of an overseas client. UBS declined to comment at this stage.

ASIC released an update on its inquiry, interviewed the market participant and the client involved the day after the incident, and gathered information from the ASX and the market participant. The regulator has ruled out HFT and a faulty algorithm as causes but is continuing to investigate and has not dismissed the possibility of market manipulation.

The mystery trades pushed ANZ’s share price up by $1.67, or about 6.5%, when trading began at 10am — lifting it to $27.63 at the opening bell — before the stock fell back to $25.79 by the market close.

The incident raised questions about the integrity of trading on the ASX because opening auction distortions affected blue‑chip prices and ASX 200 ETFs. ASIC is actively investigating, has ruled out some technical causes, and will provide updates as its inquiry continues. Everyday investors should follow regulator announcements and market notices for verified information rather than relying on intraday price movements alone.