ASIC has launched civil penalty proceedings in the Federal Court against COFCO International Australia Pty Ltd and COFCO Resources SA alleging the companies manipulated the ASX24 market for Eastern Australia Wheat futures January 2023 (WMF3) contracts.  

ASIC alleges COFCO manipulated contracts on 34 occasions between 17 January 2022 and 3 March 2022, placing orders shortly before the close of the day session of the ASX24 for the improper purpose of affecting the daily settlement price for the WMF3 contract. This conduct is commonly referred to as ‘marking the close’. 

ASIC alleges that these orders had the effect of: 

• causing the price for WMF3 contracts to not reflect the forces of genuine supply and demand in an open, informed and efficient market, and  
• creating artificial prices for WMF3 contracts on the ASX24. 

ASIC Chair, Joe Longo said, ‘ASIC is committed to responding to market manipulation in energy and commodities markets. This conduct is illegal; it erodes trust and confidence in our markets, increases costs for participants, hurts farmers, food manufacturers, importers and exporters, and impacts the prices Australians pay at the checkout.’

‘We allege these companies engaged in a repeated pattern of manipulation to benefit themselves to the detriment of other participants in the market. 

‘Fairness in commodities markets has never been more important. Consumers and economies have felt the impact of distorted supply chains through the pandemic, the Russia Ukraine war and through increases in the cost of living. 

‘We have the systems, people and powers to identify misconduct and will not hesitate to take action against those manipulating our markets,’ Mr Longo said. 

ASIC is seeking declarations and pecuniary penalties against both COFCO International Australia Pty Ltd and COFCO Resources SA.

The matter will be listed for a case management hearing on a date to be fixed by the Court.   

Downloads 

Originating Process attached (PDF 431 KB)

Concise Statement attached (PDF 551 KB)

Background 

Manipulation in energy and commodities derivatives markets was an ASIC enforcement priority for 2023. 

The daily settlement price is a daily price determined by ASX for Eastern Australia Wheat Futures Contracts for each specified delivery month for the purpose of margining and settling by ASX Clear (Futures). It is also used to calculate the value of a position held in futures contracts and to calculate profit and loss.

Editor’s Note 

On 29 August 2024,  Justice O’Bryan made timetabling orders for the next steps in the proceeding. The matter is listed for a case management hearing on 16 December 2024.