ASIC accepts EUs from Westpac and ANZ

The Australian Securities and Investments Commission (ASIC) has accepted enforceable undertakings (EUs) from Westpac and Australia and New Zealand Banking Group (ANZ) in relation to the banks’ wholesale foreign exchange (FX) businesses.

According to regulator’s investigation, both banks put in place inadequate systems to address risks relating to inappropriate conduct between 2008 and 2013.

ASIC found that the employees of both Westpac and ANZ disclosed specific confidential details of pending customer orders to external third parties.

In addition, the investigation found that Westpac’s employees:

• Acted together with an external party to share confidential information and enter and cancel offers on a trading platform
• Inappropriate received and/or disclosed confidential information about the institution’s orders
• Altered a proprietary position prior to the fix upon receipt of confidential information in relation to other institutional fix orders
• Disclosed confidential fix order information to an external party to inform their joint personal account trading strategy

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At the same time, ASIC found that ANZ’s employees:

• Traded orders in a manner which was potentially inconsistent with a proper approach to market making or hedging, and
• A former ANZ spot FX trader exchanged with an external market participant confidential information about other institutions’ customer flow

Under the terms of the EU, both organisations have been obliged to develop programmes of changes to its existing systems and the way they supervised the employees within its spot FX businesses to help prevent and respond to:

• Disclosure of confidential information
• Inappropriate order management and trading
• Inappropriate personal trading

Additionally, the programmes would be assessed by an independent consultant appointed by ASIC and after the implementation of the programmes, both organisations would be providing to ASIC for three years an annual attestation from senior executives that the systems and controls remained adequate.

Westpac would also make a community befit payment of $3 million to support the financial capability of vulnerable people, including women experiencing family violence and to elderly and youth at risk, while ANZ would pay $3 million to Financial Literacy Australia.

ASIC’s commissioner, Cathie Armour, said: “The foreign exchange market is a systemically important that depends on all participants acting with integrity and fairness,”

“ASIC is committed to ensuring that major financial institutions have the systems in place to ensure that financial services are provided fairly, honestly and efficiently.”