OpenMarkets Australia Pays $200,000 Penalty Following ASIC Notice

OpenMarkets Australia was deemed to have breached market integrity rules with ASX and Chi-X Australia Market.

OpenMarkets, one of the leading stockbrokers in Australia, has reconciled a $200,000 fine, following an infringement notice from the country’s Markets Disciplinary Panel (MDP). The watchdog had asserted that OpenMarkets breached market integrity rules with regard to ASX and Chi-X Australia Market.

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The stockbroker had come under fire from the Australia Securities and Investment Commission’s (ASIC) panel, specifically regarding the period between 2015 and 2016. More specifically, the group found various lapses in market integrity rules, including OpenMarkets’ involvement with multiple Australian exchanges.

Both ASX and Chi-X Australia Market require market participants to implement filters for their automated order processing (AOP) systems – the MDP found that OpenMarkets had lacked such filters and mechanisms.

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These filters are instrumental in helping shore up transparency measures, while also helping smooth out any execution measures. The filters are responsible for preventing trades that involved no change of beneficial ownership, rejecting the placement of sell orders which exceeded maximum order value limits as well as the placement of sell orders that were prohibited short sales.

Moreover, the filters are also responsible for identifying orders that were priced far away from the prevailing price in other markets. Ultimately, OpenMarkets was not deemed by the MDP to have utilized the appropriate organizational and technical resources at its disposal, prompting the $200,000 penalty.

A larger fine of $560,000 was originally ordered, however this sum was reduced due to a clause in OpenMarkets’ licensing agreement. This entails key conditions on its Australian financial services license in December 2016.

The penalty is a minor hiccup for OpenMarkets, which recently signed a mutual partnership agreement with Saxo Capital Markets Australia. Both venues combined their efforts in a bid to further disrupt traditional broking services. The strategic partnership has thus far been aimed at democratizing trading and providing better trading conditions to their clients.

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