UBS Pays $120,000 for “Careless” Conduct on the ASX

Traders at UBS bought around 18 million securities in ways other than by the matching of an order book.

The Australian Securities and Investments Commission (ASIC) announced on Tuesday that UBS Securities Australia Limited (UBS) has paid a penalty of AU$120,000 ($87,408) to comply with an infringement notice given by the Markets Disciplinary Panel (MDP), a peer review panel.

The matter is in regards to a number of transactions relating to six on-market buy-backs on the Australian Securities Exchange (ASX) which UBS’ brokerage unit conducted in 2017. The MDP found that not only were these not in the ordinary course of trading, but they also did not follow the client’s instructions.

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In a seven month period, the investment bank bought around 18 million securities in ways other than by the matching of an order book. The brokerage then reported the transactions to ASX as ‘Trades with Price Improvement.’

However, ASIC regulations regarding competition in exchange rates state that ‘Trades with Price Improvement’ are not permitted for on-market buy-backs as they are not in the ordinary course of trading.

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Conduct by UBS Was Careless, Not Malicious

As a result, the MDP found that UBS’ conduct was careless, but not malicious. The panel found that UBS’s internal training was not up to scratch and the traders conducting the transactions were not aware such traders were not normal.

However, according to the statement released today, the MDP accepts that the traders were not trying to infringe on the market integrity rules. Furthermore, the conduct did not cause a financial loss to the firm’s clients or third parties, and UBS did not profit on the trades outside what the brokerage would have otherwise made.

Following on from the measures, the company has adopted remedial measures, the statement says. This includes conducting further training for its traders, updating its equities desk manual and implementing trade monitoring enhancements.

The statement released today reminds that UBS’ compliance with the infringement notice is not an admission of guilt or liability.

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