Credit Suisse fined for 'false order' error
The trade was placed for a client on November 7, 2011 at an incorrect price - altering the stock market's open and low prices for that day.
The Australian Securities and Investments Commission's disciplinary panel said it was the second time the group had been fined over failures with its automated trading platform. The company has separately been sanctioned by the stock exchange's disciplinary tribunal on six other occasions since 2003 - two of which related to automated trades.
The regulator said Credit Suisse had shown negligence over the misconduct, which had the potential to harm the reputation and integrity of the market.
"Credit Suisse did not self-report the breaches to ASIC and failed to inform both ASIC and the ASX in a timely manner," it said.
"Any future, repeat contraventions in similar or comparable matters will not be viewed favourably."
According to ASIC's market integrity rules, which are enshrined in the Corporations Act, companies are required to have the technical resources in place to prevent any interference with the market. This includes making sure their automated systems, which use algorithms to generate trades, correctly pick up changes to share prices.
Credit Suisse's false trade related to the sale of 2.9 million shares in failed global construction and engineering firm Hastie Group. Credit Suisse's automated system failed to pick up changes to the company's share price that occurred earlier in the day when Hastie performed a 10 to 1 share consolidation.
As a result, the false order was placed at 47¢ lower than it should have been, at 51¢.
ASIC noted that Credit Suisse had agreed not to contest the matter or dispute any material facts.
A Credit Suisse spokesman said: "Credit Suisse responded promptly to this incident and has put in place necessary processes to help prevent a reoccurrence."
Frequently Asked Questions about this Article…
ASIC fined Credit Suisse for failing to detect a false order placed on its automated trading system that was entered for a client on November 7, 2011 at an incorrect price. The regulator said the error altered the stock market's open and low prices for that day and showed negligence that could harm market reputation and integrity.
Credit Suisse's equities arm was fined $95,000 by ASIC and was put on notice by the corporate watchdog. ASIC's disciplinary panel also noted the firm had previously been fined for failures with its automated trading platform.
The error occurred because Credit Suisse's automated system failed to pick up a 10-to-1 share consolidation earlier in the day for Hastie Group. That failure meant the sale order for 2.9 million Hastie shares was placed at 47¢ lower than it should have been — at 51¢.
The false trade involved 2.9 million shares in Hastie Group, a failed global construction and engineering firm. The automated system did not register Hastie's 10-to-1 share consolidation earlier that day.
No. ASIC said Credit Suisse did not self-report the breaches and failed to inform both ASIC and the ASX in a timely manner. Credit Suisse agreed not to contest the matter or dispute any material facts.
ASIC pointed to market integrity rules in the Corporations Act requiring firms to have the technical resources to prevent interference with the market. For everyday investors, that means brokers and banks must ensure their automated systems and algorithms correctly detect price changes to avoid erroneous trades that can distort market prices.
Yes. ASIC said this was the second time the group had been fined over failures with its automated trading platform. Separately, the ASX disciplinary tribunal has sanctioned Credit Suisse on six other occasions since 2003, two of which related to automated trades.
A Credit Suisse spokesman said the firm responded promptly to the incident and has put in place necessary processes to help prevent a reoccurrence.
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