ASIC spots forex breaches at ANZ and Westpac

ASIC has accepted enforceable undertakings from Westpac and ANZ following an investigation into the banks' wholesale foreign exchange businesses.

The regulator found that between 2008 and 2013, Westpac and ANZ's systems and controls failed to address or prevent inappropriate conduct in said businesses.

Misconduct at Westpac identified by ASIC included employees disclosing confidential information regarding pending client orders to external traders; receiving confidential information about FX orders in the course of fix order management and execution; and disclosing fix order information to an external party to inform a joint personal account trading strategy.

On ANZ's side, ASIC found similar breaches, along with traders exchanging material information with an external market participant about other institutions' customer flow and proprietary positions, and employees "trading in a manner which was potentially inconsistent with a proper approach to market making or hedging."

Westpac and ANZ's EUs will entail the banks developing a program of changes to their existing FX employee supervision systems which will be assessed by an independent consultant. For a period of three years, senior Westpac and ANZ executives will also be required to provide annual attestations that said systems are "appropriate and adequate to effectively prevent, detect and respond to specified matters."

Each bank will also make a one-off $3 million community benefit payment; Westpac's will go to supporting the financial capability of vulnerable people, including women experiencing family violence, and ANZ's will go to Financial Literacy Australia.

Westpac Institutional Bank chief executive Lyn Cobley said: "We continue to enhance our policies and controls across the Spot FX business and we look forward to continuing this process as we fulfil our commitments set out in the enforceable undertaking."

ANZ chief risk officer Nigel Williams added: "ANZ has co-operated fully with ASIC's investigation on this matter and we accept that during this period, aspects of our supervision and monitoring of the Spot FX business were not good enough. We have taken responsibility and we apologise."

Read more: ANZASICSpot FXWestpac Institutional BankFinancial Literacy AustraliaLyn CobleyNigel Williams
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