The Australian Securities and Investments Commission (ASIC) has imposed additional conditions on Macquarie Bank Limited’s Australian financial services licence after multiple and significant compliance failures – some going undetected for many years and one for a decade.

The compliance failures relate to Macquarie’s futures dealing business and its over-the-counter (OTC) derivatives trade reporting.

The additional licence conditions will require Macquarie to:

• prepare a remediation plan to address the failures in their futures dealing business and OTC derivatives trade reporting functions and their root causes;
• appoint an independent expert to review and report on the adequacy of Macquarie’s remediation plan to address the failures and their root causes, and
• have the independent expert assess the operational effectiveness of Macquarie’s remediation activities to prevent, detect and respond to similar issues occurring in its futures dealing and OTC derivatives businesses in the future.

The control weaknesses ranged from poor change management practices, unclear roles and responsibilities, and an incomplete understanding of its own processes and controls, including around data governance.

ASIC’s administrative action follows the identification or reporting of nine market conduct matters of concern in the last 18 months – seven matters relating to misreporting of more than 375,000 OTC derivative transactions, and two futures dealing matters concerning the prevention and detection of suspicious trading activity and the withholding of orders on the ASX24 market.

Many of the OTC derivatives trade reporting breaches continued for a number of years without detection.

In September 2024, ASIC’s Markets Disciplinary Panel fined Macquarie a record $4.995 million for failing to prevent suspicious orders being placed on the electricity futures market.