Regulator calls Australia's Macquarie 'reckless' over futures trading breach

SYDNEY (Reuters) - Top Australian investment bank Macquarie Group showed a "reckless and poor attitude to compliance" by failing to act on warnings about suspicious futures trades carried out on its platform, the country's corporate regulator said on Friday.

Australian Securities and Investments Commission (ASIC) Chair Joe Longo said by enabling some 50 electricity futures trades by clients in the seconds before the market closed, Macquarie played a part in market manipulation due to its dominant position.

The country's eighth-largest listed company received a A$5 million ($3.31 million) fine last month after an ASIC disciplinary panel found it breached market integrity rules by failing to stop the trades by three clients from January to September 2022. The fine was the biggest ever given by the panel.

At the time, ASIC said it had warned Macquarie about the suspicious trades six times but not received a response.

"It was how Macquarie handled the matter that was, in my view, of most concern," Longo told a parliamentary hearing on Friday, in a routine appearance for Australian regulators.

"Those warnings were effectively ignored for too long. There were acknowledgments but there was no action. Macquarie failed to appreciate the seriousness of its obligations as a market participant."

Macquarie declined to comment on Friday but referred to its comments at the time of the fine, when it took full responsibility and said it had implemented remediation actions to ensure similar orders were escalated.

ASIC's Longo told the parliamentary hearing that the disciplinary panel found Macquarie staff did not have the training and skills to monitor the electricity futures market.

He said the company failed to introduce an interim solution because it was "too resource-intensive".

Macquarie's response to ASIC's investigation of the futures trades "was in all the circumstances demonstrative of a reckless and poor attitude to compliance", Longo said.

"This is a very disappointing incident."

($1 = 1.5106 Australian dollars)

(Reporting by Byron Kaye; Editing by Jamie Freed)

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