Australia’s corporate regulator has tightened oversight of Macquarie Bank, imposing extra conditions on its Australian Financial Services licence after what it called multiple and significant compliance failures in the bank’s futures dealing operations and over-the-counter (OTC) derivatives trade reporting — some of which went undetected for years, including one for a decade.
Under the conditions, Macquarie must draw up a remediation plan addressing the breakdowns and their root causes, appoint an independent expert to review that plan, and have the expert test whether the fixes operate effectively to prevent, detect and respond to similar problems in its futures and OTC derivatives businesses.
ASIC Commissioner Simone Constant said, ‘Our intervention underscores our concern with the recurrent nature of Macquarie’s failures, which were caused by ineffective supervision and weak compliance and control management.’
ASIC pointed to a range of control gaps, including weak change-management practices, blurred responsibilities and an incomplete grasp of the bank’s own processes and controls, particularly around data governance.
‘The additional licence conditions are a significant administrative action to ensure Macquarie comprehensively addresses ASIC’s concerns. It cannot be a piece-meal or band-aid fix.
‘Macquarie must take responsibility and put in place appropriate action to remediate the repeated failures and underlying governance and supervisory failures.
‘We were particularly disappointed that Macquarie failed to prevent 11 suspicious orders being placed on the electricity futures market via Macquarie terminals shortly after ASIC had referred similar failures to the Markets Disciplinary Panel which fined the bank just under $5 million.’
The regulator’s move follows nine market conduct issues identified or reported over the past 18 months. Seven involved misreporting more than 375,000 OTC derivatives transactions, while two related to futures dealing — covering both the prevention and detection of suspicious activity and the withholding of orders on the ASX24 market. Several of the trade reporting breaches persisted for years before they were found.
‘Misreporting of OTC derivative transactions can undermine market transparency and hinders ASIC’s ability to monitor potential risks in Australia’s financial system,’ Ms Constant said. ‘These licence conditions are necessary to give ASIC confidence the remediation will be effective and drive sustainable change.’
ASIC said Macquarie has cooperated throughout and consented to the additional conditions.
The action comes after the Markets Disciplinary Panel in September 2024 imposed a record A$4.995 million penalty on Macquarie for failing to prevent suspicious orders on the electricity futures market.
