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 global financial crisis.
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 they had been in the market and observed the unusual trades, which they believe 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.
A spokesman for the ASX said the stock exchange had alerted ASIC to the price spikes in the morning.
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.