ASIC has accepted an enforceable undertaking from Avalon Pacific Capital Pty Ltd in relation to its dealing in securities of five overseas registered companies listed on the National Stock Exchange of Australia (NSX).
ASIC is concerned that Avalon Pacific ought reasonably to have suspected that the orders were placed with the intention of creating a false or misleading appearance of the price of the securities.
Avalon Pacific has undertaken to cancel its NSX market participant status and not to deal in NSX listed companies via another market participant.
ASIC Commissioner Cathie Armour said, 'As gatekeepers, market participants must have systems in place to detect and prevent suspicious orders from being placed on Australian licensed financial markets. ASIC considers this is a significant outcome that will help protect investors and ensure the integrity of the market'.
ASIC's investigation into trading in the entities is continuing.
Background
Avalon Pacific was the largest NSX Market Participant by value traded in 2017 as at June 2017.
Avalon Pacific accepted and placed orders to trade in four Samoan registered and one British Virgin Island registered company listed on the NSX.
ASIC is concerned that Avalon Pacific did not take into account the following circumstances of the orders:
- the orders resulted in trades that materially increased the price of each security
- the trades appeared to be part of a series intended to increase the price of each security
- the orders were provided to Avalon Pacific by individuals who appear to be involved in the management of the companies
- some of the orders were accompanied by unusual settlement instructions, and
- some of the substantial price increases did not appear to be matched by company announcements that would explain the price increases and Avalon Pacific made no attempts to determine if there was a legitimate commercial reason for the orders.