October 30, 2013 - ABN AMRO Clearing Sydney Pty Ltd ("ABN AMRO") has paid a penalty of $130,000 to comply with an infringement notice given to it by the Markets Disciplinary Panel ("MDP").

On 13 February 2012, ABN AMRO granted access to its Automated Order Processing ("AOP") system, to a software vendor representing a client of ABN AMRO. The vendor correctly installed a file containing the pre-trade limits for the client's account which had been set by ABN AMRO, but failed to include a specific computer command which would have activated the checking of pre-trade limits.

As a result of the missing computer command, and ABN AMRO's failure to check for the presence of the command, the pre-trade order size limits and maximum position limits which ABN AMRO had applied to the client's account did not prevent orders in excess of those limits being submitted into the ASX market.

On 4 July 2012, at approximately 2:56pm, ABN AMRO on behalf of its client began submitting a total of 13,479 orders in FKP Property Group ("FKP") stapled securities into the ASX market for a total volume of 177,832,305 FKP, which equated to approximately 14.67% of FKP's issued capital at the time, the majority of which was placed at a price of $0.40.

The MDP found it had reasonable grounds to believe that ABN AMRO failed to have in place at all times an appropriate automated filter for its AOP system to account for pre-trade limit checks, failed to ensure that its AOP system had in place adequate organisational and technical resources to thoroughly verify the correct operation of third party software installed onto its AOP system, and there was a resulting market for FKP on 4 July 2012 which was not both fair and orderly.

ASIC Commissioner Cathie Armour said: 'It is absolutely critical to maintaining the integrity of our financial markets that participants who provide direct market access to clients employing algorithmic trading strategies are extra vigilant with respect to their internal processes for ensuring that they have in place appropriate automated filters and for conducting testing to ensure that those filters are correctly employed.

'This outcome demonstratesey have in place appropriate automated filters and for conducting testing to ensure that those filters are correctly employed.

'This outcome demonstrates the risks that dysfunctional algorithmic trading can pose to our financial markets and ASIC's commitment in this area as outlined in our recent report into dark liquidity and high frequency trading.'