Merrill Lynch Equities (Australia) has paid a penalty of A$96,000 to
comply with a notice given by the markets disciplinary panel of the Australian
Securities and Investments Commission. The subsidiary of Bank of America Merrill Lynch was taken to task in respect of a trading incident that
took place in 2012.
The penalty was due to its failure to have in place an appropriate automated
price filter in relation to automated order processing for a client account.
The regulator said that “this interfered with the efficiency and integrity of
the ASX market, failing to prevent the entry into the Australian Securities
Exchange trading platform of an erroneous order which resulted in a market for
Class A non-voting common stock in News Corporation not being both fair and
orderly.”
In February 2012, a DMA client of Merrill Lynch entered an order into Merrill Lynch’s automated order processing system to sell stock in News Corporation. The order was set at A$0.43, whereas the last traded price had been A$17.96.
The order was submitted into the ASX Trading Platform without triggering a filter. The transactions resulted in a 97.6% decrease in the traded price of the stock.
Within eight seconds of submission, Merrill Lynch cancelled the rest of the order and got in touch with the ASX. However, entry of the order contravened ASIC’s market integrity rules. ASIC said that Merrill Lynch took the correct action after the breach was detected, but it had already received 10 previous sanctions since 2005.