Compliance issues

Australian Regulator Fines FC Stone $130,000 for Risk Management

Violations have been identified by the ASIC Market Participant Supervision team back in 2012

The Australian Securities and Investments Commission (ASIC) issued a communique announcing that FC Stone Australia has been fined $130,000 on a number of compliance failures. The infringement notice has been served by the Markets Disciplinary Panel (MDP) which found that the company did not comply with some ASIC integrity rules.

According to the Australian regulator, the company has failed to demonstrate prudent risk management procedures by not setting and documenting appropriate maximum price change limits. In addition it did not perform accurately daily reconciliation and at the same time did not notify ASIC about it.

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FC Stone Australia has failed to present to ASIC a monthly reconciliation within the required time and did not provide the regulator with an accurate ad hoc NTA return on two occasions.

The violations were identified during an onsite review of FC Stone by the ASIC Market & Participant Supervision team in 2012.

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Relating to the first count, the regulator has highlighted in its announcement that market participants must demonstrate prudent risk management procedures, including, but not limited to maintaining a set and document maximum price change limits.

In addition accurate reconciliation, should be submitted by 7.00 pm on the Business Day after the Business Day to which the reconciliation relates. ASIC states that FC Stone Australia failed on this count as well as on monthly reconciliation, which must be given to ASIC by the last Business Day of the calendar month following the calendar month to which the reconciliation relates.

Market participants in Australia must notify ASIC, in writing, within 2 Business Days if a reconciliation has not been performed and if requested by ASIC in writing, give ASIC an ad hoc NTA return for the period specified in ASIC’s request, containing the appropriate information within 24 hours of receipt of ASIC’s request.

FC Stone has complied with the infringement notice, such compliance is not an admission of guilt or liability.

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