UBS Assisting Australian Regulator in Price-Spike Probe
UBS AG (UBSN) is assisting the Australian market regulator with an informal inquiry regarding a client order placed on Oct. 18, Caroline Gurney, a Sydney-based spokeswoman for the Swiss bank said.
Sudden gains in stocks such as Australia & New Zealand Banking Group Ltd. and Brambles Ltd. at the open of Australia’s main share market briefly added $10 billion to the benchmark S&P/ASX 200 Index on Oct. 18. The Australian Securities and Investment Commission is examining the price spikes, spokesman Andre Khoury said. The unusual moves were triggered by bids being canceled seconds before trading began, two people familiar with the investigation told Bloomberg last week.
Australia joined other countries experiencing market disruption this year. Orders for Indian stocks improperly entered by a Mumbai brokerage sent the S&P CNF Nifty Index down 16 percent in eight seconds on Oct. 5 before it rebounded. In the U.S., Knight Capital Group Inc., one of the biggest market makers, bombarded American exchanges with mistaken orders in the first minutes of trading on Aug. 1. The company blamed the mishap on defective software.
“We are proactively assisting ASIC and the matter is in their hands,” Caroline Gurney, a Sydney-based spokeswoman for UBS, said by telephone. “We’re confirming that it was a client order,” she said, declining to comment on if and when it was executed or whether the order moved prices.
ASIC’s Khoury said the regulator is continuing to look into the matter.
“It wouldn’t be appropriate to start providing a running commentary, confirming or denying etc., or providing insights on operational matters,” he said when asked about the UBS trade.
ANZ opened 6.4 percent higher as 836,205 shares changed hands in 349 trades, all at the ask price of A$27.63, according to data compiled by Bloomberg. The stock fell back to A$26.13 within a minute and ended the day lower at A$25.95.
ASX publishes the broker code associated with each transaction three days after the trade has occurred. It doesn’t specify whether the orders are being executed on behalf of clients or for the firms themselves.
Goldman Sachs Group Inc.’s broker code appears next to purchases of more than 550,000 shares of ANZ during the opening auction on Oct. 18, more than any other broker, according to data compiled by Bloomberg. Citigroup Inc., Deutsche Bank AG, JPMorgan Chase & Co., CLSA Ltd. and Macquarie Group Ltd. were among brokers purchasing shares at the time, the data show.
The S&P/ASX 200 index opened at 4,567.70 at 10 a.m. Oct. 18, 0.87 percent higher than the previous close, according to data compiled by Bloomberg. The gain was halved within one minute, with the gauge falling to 4,547.72, the data show. The measure closed up 0.7 percent, the highest level since July 2011.
AGL Energy Ltd., which closed Oct. 17 at A$14.84, opened 4.3 percent higher when 177,416 shares changed hands in 107 trades at the price of A$15.84. It closed at A$14.86 yesterday.
AMP Ltd., an insurer, opened 4.5 percent higher when 1.1 million shares were exchanged in 157 trades at A$4.85. The stock closed 3.7 percent below this level at A$4.67.
Brambles, a supplier of shipping pallets, jumped 7.5 percent to A$7.69 straight after the open before falling to A$7.38 within the first minute of trade. The shares closed at A$7.26 in Sydney. The first trades of the day were crossed from two off-exchange transactions for a total of 50,000 shares at A$7.65, according to data compiled by Bloomberg.
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