The Australian Securities and Investments Commission (ASIC) reported on Wednesday it has accepted enforceable undertakings (EUs) from the National Australia Bank Ltd. (NAB) and the Commonwealth Bank of Australia (CBA) in relation to their wholesale spot forex businesses.
The two banks have agreed to make a community benefit payment of $2.5 million each towards advancing financial literacy education related to the aged care sector.
According to the regulator, the two banks failed to ensure that their systems, controls and supervision were adequate to address risks relating to instances of inappropriate conduct identified by ASIC between 1 January, 2008, and 30 June, 2013.
On several occasions during that period, employees of the two banks disclosed to external third parties confidential information about the banks’ client flow or proprietary positions. Moreover, CBA staff traded traded in a manner that may have been intended to cause the trigger price for a stop loss order to trade when it might not have traded at that time. They also acquired proprietary positions in offshore spot forex currency after coming into possession of knowledge of large CBA fix orders in that currency.
NAB and CBA will develop programs of changes of their existing systems, controls, monitoring and supervision relating to the management of fix orders, management of stop loss orders, and external communications containing specific confidential information to address such conduct. The programs will be implemented within a three-year period and will be assessed by independent consultants appointed by the Australian regulator.
Earlier this year, the ASIC announced it launched a civil penalty procedure against the National Australia Bank (NAB) for market manipulation with the bank bill swap (BBSW) reference rate.
The ASIC is an independent body that oversees the corporate, markets and financial services markets in Australia. It regulates local companies, financial markets, financial services organizations and professionals who deal and advise in investments, superannuation, insurance, deposit taking and credit.