Interactive Brokers fined $832,500 for its 'negligent' behaviour

Market participant Interactive Brokers Australia Pty Ltd (ACN 166 929 568) (Interactive Brokers) has paid a penalty of $832,500 to comply with an infringement notice from the Market Disciplinary Panel (MDP).

The outcome follows the MDP finding that Interactive Brokers was ‘negligent’ in its failure to identify suspicious trading conducted by one of its clients. The MDP also found that Interactive Brokers was ‘reckless’ in continuing to allow further suspicious trading to occur after ASIC raised concerns about the trades and that it did not maintain the necessary organizational and technical resources to comply with the law.

Market participants play an important gatekeeper role in detecting and preventing suspicious trading. They must have effective controls and adequate resources to efficiently identify and disrupt potential market misconduct, and they need to respond quickly to concerns raised by ASIC.

ASICs concerns arose from certain Closing Single Price Auction (CSPA) orders placed by a client of Interactive Brokers on the ASX between 10 March and 5 November 2021. The client actively traded in Orthocell Ltd (OCC) shares and was known to Interactive Brokers as an experienced trader who had been employed in the industry.

The MDP considered that these circumstances demonstrated that Interactive Brokers did not have sufficient staff with the necessary skills, knowledge or experience to properly assess the alerts or those staff were not adequately supervised to ensure they were doing their job.

About InteractiveBrokers

InteractiveBrokers is a US-based online brokerage firm that provides access to a wide range of financial instruments, including stocks, options, futures, forex, bonds, and funds. The company was founded in 1977 and has since grown to become one of the largest online brokers in the world, serving both retail and institutional clients in over 150 markets across the globe. InteractiveBrokers offers a range of advanced trading tools and platforms, competitive pricing, and access to global markets, making it a popular choice for traders and investors.

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