In an announcement yesterday, the regulator said it was concerned that between 1 January 2008 and 30 June 2013, both banks failed to ensure that their systems and controls were adequate to address risks relating to instances of inappropriate conduct.
At Westpac, for example, ASIC said employees disclosed confidential details of pending client orders to external traders in the spot FX market.
On at least one occasion, a Westpac employee acted together with an external party to share confidential information and enter and cancel offers on a trading platform other than in the ordinary course of “hedging or market making”, ASIC said.
“ASIC is concerned that Westpac did not ensure that its systems, controls and supervision were adequate to prevent, detect and respond to such conduct, which had the potential to undermine confidence in the proper functioning and integrity of the market,” the statement said.
ANZ employees were also found to have had disclosed specific confidential details of pending customers to external third parties.
A former ANZ spot FX trader exchanged confidential and potentially material information about other institutions’ customer flow or proprietary positions with an external market participant.
In addition, ANZ employees who were responsible for managing particular client orders traded in a manner that was potentially inconsistent with a proper approach to market making or hedging, ASIC said.
Under the EU, Westpac and ANZ will develop a program of changes to its existing systems, controls, monitoring and supervision of employees within its FX business.
The programs and implementations will be assessed by an independent consultant appointed by ASIC.
ANZ will also make a community benefit payment of $3 million to Financial Literacy Australia, while Westpac will make a community benefit payment of $3 million to support the financial capability of vulnerable people including women experiencing family violence, the elderly and youth at risk, the statement said.
In a statement, ANZ chief risk officer Nigel Williams said: “ANZ has cooperated fully with ASIC’s investigation on this matter and we accept that during this period, aspects of our supervision and monitoring of the Spot FX business were not good enough.”
“We have taken responsibility and we apologise.
“There has been a cultural and compliance step change in our Markets business since 2013. While we are always looking at ways to strengthen our compliance environment, there have been major improvements to compliance, training and monitoring systems in recent years which will go a long way toward ensuring this does not happen again.”
