Credit Suisse to pay $75,000 in Australia for trading violations

Australia’s regulator said traders were inadequately trained and surveillance systems failed to prevent the violations at Credit Suisse.

Credit Suisse has paid a $75,000 penalty to comply with an infringement notice after authorities in Australia found it had violated trading rules.

The Australian Securities & Investments Commission (ASIC) said in a statement that Credit Suisse had conducted an on-market buy-back of shares for three clients, and entered into trades by matching orders for its buying and selling clients, rather than matching orders on an order book.

ASIC’s Markets Disciplinary Panel (MDP) said Credit Suisse then reported these trades to the Australian Securities Exchange (ASX) as trades with price improvement, known as NXXT trades. However, NXXT trades are not permitted for an on-market buy-back, and the MDP stated that the bank had failed to act in accordance with its clients’ instructions.

“The MDP considered Credit Suisse’s conduct to be careless because its execution desk employees were inadequately trained in relation to on-market buy-backs and were therefore unaware that NXXT Trades were not permitted during an on-market buy-back,” ASIC said. “Additionally, Credit Suisse’s surveillance systems had also failed to prevent the NXXT trades from being executed.”

The trading violations took place from March 2017 to November 2018. Credit Suisse reported the NXXT trades to the regulator before taking steps to contact clients about the issue. The bank also further trained its execution desk and now sends reminder emails stating that traders should not execute NXXT trades during an on-market buy-back.

The MDP also said the Credit Suisse did not appear to have benefited from the conduct beyond the brokerage fees and commissions, and its clients were not hit with any financial losses as a result of the violations.