The Tokyo branch of BNP Paribas Securities (Japan) has replaced its general manager and chief country representative, and made a string of management changes to strengthen controls after the Japanese Financial Services Agency (FSA) ordered one of its units to stop trading for two weeks.
The FSA said last week that the branch must suspend all business activities in its global equities and commodity derivatives division from 2-16 November after an allegation that one of the division’s traders had tried to fix the price of a listed instrument, and because it deemed reports the division had submitted as part of a previous regulatory order, issued in November last year, “were incomplete in terms of content and contained untruthful descriptions”.
The regulator also issued BNP Paribas Securities (Japan) with a ‘business improvement order’ calling on it to, among other things, clarify the responsibility of management and staff, enhance compliance and put measures in place to ensure appropriate and effective internal audits and inspection.
As a result of the FSA orders, Yusuke Yasuda, current general manager and chief country representative for Japan, will leave BNP Paribas on 1 November, to be replaced by Philippe Avril. Avril was appointed general manager of the Tokyo branch on 1 September, having previously been branch manager and representative for Japan at The Royal Bank of Scotland.
BNP Paribas has also appointed Mike Watanabe as head of global equities and commodity derivatives, Japan. In addition, the bank revealed that it had named Savuth Kong as chief risk officer on 1 August and Laurent Vallee as chief operating officer on 1 September to bolster controls in Japan.
“We are confident that these changes in management will contribute to further enhancing our governance and business in Japan,” said Alain Papiasse, BNP Paribas’ head of corporate and investment banking, in a statement. “We remain fully committed to the Japanese market and to our clients.”
The FSA’s section follows an investigation into BNP Paribas Securities (Japan)’s Tokyo branch by the Securities and Exchange Surveillance Commission (SESC), after which the commission recommended that the FSA take regulatory action.
The regulator alleges that a trader in the equity and options division of the branch, in turn part of the global equities and commodity derivatives unit, sent a “massive” purchase order for a specific stock in the closing auction just before market close on 5 November 2008 to try and fix the price of the stock.
The inadequate reports relate to a financing swap transaction with a client, which, according to the FSA, BNP Paribas Securities (Japan) had wrongly advised the client not to disclose. The resulting FSA business improvement order, issued on 28 November, required the bank to report on its remedial action by 7 January 2009.
In addition to the FSA sanctions, the Japan Securities Dealers Association has fined BNP Paribas Securities (Japan) ¥100 million and suspended its membership for six months.