iscover
iscover 
The Australian Securities and Investments Commission (ASIC) has imposed additional conditions on Macquarie Bank’s Australian financial services licence following multiple and serious compliance failures across its futures and over-the-counter (OTC) derivatives operations – some going undetected for years.
The enforcement action follows the identification or reporting of nine separate market conduct concerns over the past 18 months.
These included the alleged misreporting of over 375,000 OTC derivative transactions and failures to prevent or detect suspicious trading activity on the ASX 24 market.
Under the new conditions, Macquarie Bank will be required to prepare a remediation plan addressing the compliance failures and their root causes, appoint an independent expert to review the plan’s adequacy, and ensure the expert also assesses the effectiveness of the remediation efforts going forward.
Reaching out to Broker Daily, a spokesperson for Macquarie said: “The compliance failures raised by ASIC relate to futures dealing and reporting of over-the-counter derivatives trades and not the services provided to customers by our Australian retail banking or home lending operations.”
ASIC commissioner Simone Constant said: “Our intervention underscores our concern with the recurrent nature of Macquarie’s failures, which were caused by ineffective supervision and weak compliance and control management.”
The regulator found that Macquarie’s systems were affected by poor change management practices, unclear roles and responsibilities, and an incomplete understanding of its internal processes and data governance.
“The additional licence conditions are a significant administrative action to ensure Macquarie comprehensively addresses ASIC’s concerns. It cannot be a piece-meal or band-aid fix,” Constant said.
“Macquarie must take responsibility and put in place appropriate action to remediate the repeated failures and underlying governance and supervisory failures.”
She noted the regulator’s disappointment that the bank had allegedly failed to prevent 11 suspicious orders from being placed on the electricity futures market shortly after a similar issue had already led to a $5 million fine from the Markets Disciplinary Panel.
According to ASIC, many of the breaches in OTC trade reporting went undetected for years, undermining market transparency and its ability to monitor financial system risks.
“Misreporting of OTC derivative transactions can undermine market transparency and hinders ASIC’s ability to monitor potential risks in Australia’s financial system,” Constant said.
“These licence conditions are necessary to give ASIC confidence the remediation will be effective and drive sustainable change.”
ASIC said that Macquarie has co-operated throughout the process and consented to the imposition of the additional licence conditions.
More to come...
[RELATED: Federal Court rules business lender breached credit laws]
