THE integrity of trading on the Australian Securities Exchange was called into question last night after a series of unusual transactions raised the spectre of market manipulation.
Shares in more than eight blue-chip stocks including ANZ Bank, Commonwealth Bank, Brambles, AGL, Bank of Queensland, Ansell and Aristocrat saw massive spikes in their share prices in the seconds after they began trading at 10am yesterday.
The share purchases, which are being examined by the Australian Securities and Investments Commission, were placed at 9.47am by a yet-to-be identified seller.
It is believed the client was trading from overseas.
The initial prices of those orders were in line with the previous day's closing price.
At 9:59.54 six seconds before trading commenced the mystery seller amended the price and volume on share orders.
Such was the speed of the amendments that brokers and traders last night told BusinessDay that a computer program must have been used to make the changes.
The changes inflated the opening share price of the companies for a few seconds and, as a result, lifted the opening price of the S&P/ASX 200 Index, which tracks the 200 most valuable companies in the country.
The trades were large enough to affect the prices of options traded on the S&P/ASX 200 Index. That index rose to 4606 on the back of the moves, breaking through the 4600 barrier for the first time since the GFC.
Several stockbrokers noted that October futures and options that track that index expired yesterday, and the settlement price was the inflated 4606 opening price.
Sources at Goldman Sachs last night confirmed that they had been in the market and observed the unusual trades, which they believe are highly unusual and warrant further investigation. There is no suggestion that any Goldman Sachs employee was involved with the highly unusually trading.
Only ASX 200 companies beginning with the letter A, B or C were affected yesterday.
ANZ, which closed at $25.79 on Wednesday, soared to $27.63 on the opening bell, before collapsing to $26.16.
A spokesman for ASIC said it was aware of a surge in ANZ share prices and "was looking into the matter".
"Market integrity is fundamental to what we do and if we detect any potential breaches of the law or market integrity rules we will take timely and appropriate action," the spokesman said.
Ivor Ries, a senior research analysis at Wilson HTM, said such a manipulation would theoretically benefit someone with a big derivative position. "You would be trying to cause the index to go through some point where you can crystallise your profit on the index.
"These sort of things further undermine people's confidence that the market's fair and transparent."
A spokesman for the ASX said the stock exchange had alerted ASIC to the price spikes in the morning.
"ASIC has responsibility for real-time market surveillance and ASX will assist ASIC with its inquiries as required."
Brokers have complained that the shift in responsibility for control of the market from the ASX to ASIC meant that nothing was done when trades of this nature caused alarm bells to ring.
Frequently Asked Questions about this Article…
What unusual trading activity happened on the ASX that raised market manipulation concerns?
A series of large buy orders placed before the open were rapidly amended seconds before trading began, causing massive, short-lived spikes in opening prices for more than eight blue‑chip stocks. Brokers said the speed of the amendments suggested a computer program was used, and the trades briefly inflated opening prices across affected stocks and the S&P/ASX 200 index.
Which companies and stocks were affected by the unusual ASX trades?
The moves hit more than eight ASX 200 blue‑chip stocks, including ANZ, Commonwealth Bank, Brambles, AGL, Bank of Queensland, Ansell and Aristocrat. The article also noted that only ASX 200 companies beginning with the letters A, B or C were affected that morning.
When were the orders placed and how did timing affect the opening prices?
The share purchases were placed at 9:47am by a yet‑to‑be‑identified seller and were amended at 9:59:54am—six seconds before the 10am market open. Those last‑second amendments inflated the opening prices for a few seconds and pushed up the S&P/ASX 200 opening level.
Did the unusual trades affect the S&P/ASX 200 index and related derivatives?
Yes. The inflated opening prices lifted the S&P/ASX 200 index to 4,606—pushing it above the 4,600 mark—and the moves were large enough to affect the prices of options and futures tied to the index. Several brokers noted October futures and options expired that day and used the inflated 4,606 opening as the settlement price.
Who is investigating the trades and what have regulators said?
The Australian Securities and Investments Commission (ASIC) is examining the transactions. The ASX alerted ASIC to the price spikes and said it will assist ASIC with inquiries. An ASIC spokesman said market integrity is fundamental and that they will take timely and appropriate action if potential breaches are detected.
Was any specific firm or individual identified as responsible for the unusual trading?
No. The seller who placed and amended the orders was yet to be identified; it is believed the client was trading from overseas. Goldman Sachs confirmed its traders observed the unusual activity and said the trades were highly unusual and warrant further investigation, but there was no suggestion any Goldman Sachs employee was involved.
Why would someone try to manipulate opening prices on the ASX?
According to Ivor Ries, a senior research analyst quoted in the article, such manipulation could theoretically benefit someone holding a large derivative position. By pushing an index through a particular level at settlement, a trader could crystallise profits on an index‑linked position—actions that also undermine confidence in market fairness and transparency.
What happened to ANZ's share price during the spike and who is looking into it?
ANZ shares jumped from a Wednesday close of $25.79 to an opening high of $27.63 before falling back to $26.16. ASIC said it was aware of the surge in ANZ share prices and was looking into the matter.
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