New ASIC Action: Additional AFSL license conditions imposed on Macquarie
Reason: Repeated and significant compliance failures spanning up to a decade
Scope of Failures: Futures dealing business and OTC derivatives trade reporting
Key Requirements:
Remediation plan for futures dealing and OTC derivatives reporting
Independent expert review of remediation plan adequacy
Ongoing assessment of remediation effectiveness
In September 2024, Macquarie was fined a AUD 4.995 million by ASIC’s Markets Disciplinary Panel for failing to prevent suspicious orders in the electricity futures market.
This was covered in our previous blog here:
Despite this significant penalty and heightened scrutiny, ASIC has now identified further compliance gaps.
These newly revealed issues have prompted ASIC to take administrative action by imposing additional conditions on Macquarie’s Australian financial services license (AFSL).
According to ASIC Commissioner Simone Constant, Macquarie’s repeated compliance failures highlight "ineffective supervision and weak compliance and control management".
Futures Dealing Business
ASIC cites 11 instances of suspicious orders placed on the electricity futures market, occurring shortly after Macquarie was already fined for similar misconduct.
Macquarie failed to identify and stop potential market abuse despite warnings, suggesting systemic shortcomings in monitoring and escalation processes.
OTC Derivatives Trade Reporting
More than 375,000 OTC derivative transactions were misreported over the last 18 months, undermining market transparency and limiting ASIC’s ability to monitor systemic risk.
Some breaches remained undetected for years, indicating breakdowns in data governance, change management, and internal controls.
ASIC’s action imposes new obligations on Macquarie’s license to ensure structural remediation:
Remediation Plan
Macquarie must develop and implement a comprehensive remediation plan to address the root causes of its compliance failures, focusing on governance, controls, escalation procedures, and data reporting accuracy.
Independent Expert Oversight
An independent third-party expert will be appointed to review and assess the adequacy of the remediation plan, ensuring the proposed solutions are robust and aligned with ASIC’s expectations.
Assessment of Operational Effectiveness
January-February 2022: First client placed initial suspicious orders
February 2022: ASIC first alerted Macquarie about suspicious trading
May-June 2022: Second wave of suspicious orders from first client
June 2022: Second client began placing suspicious orders
September 2022: Third client placed 21 suspicious orders
October 2022: Macquarie finally implemented an interim surveillance measure
Commissioner Constant emphasized that these license conditions are a "significant administrative action", calling for a “comprehensive fix, not a band-aid solution.” ASIC stressed that piecemeal or reactive measures would be insufficient to restore confidence in Macquarie’s compliance culture.
ASIC - Press Release - Macquarie Bank fined a record $4.995m for serious market gatekeeper failure
ASIC - MDP04/24, Wednesday, 25 September 2024 Markets Disciplinary Panel: Infringement Notice