A raft of banks and trading firms are set to sue Australian
Securities Exchange (ASX) after its review into a series of
cancelled trades failed to quell anger in the market.
Transmarket Group is the most vocal of the complainants, but
sources indicate a joint lawsuit will also name firms including
UBS, Société Générale, National
Australia Bank (NAB), Australia and New Zealand Bank, Westpac
and at least one hedge fund client of MF Global as
Mike Donohue, Singapore-based head of Transmarkets
Asia-Pacific business, confirmed that his firm is
pursuing joint legal action with other aggrieved parties.
He said, The message has to be delivered to ASX that it
cannot continue to exist outside standards of fair
The argument rests on the cancellation of 337 trades involving
bank bill and three-year bond futures which the exchange said
resulted in erroneous price discovery on 25
Although traders accept that the original orders were entered
in error, their anger rests on the cancellation of one leg of
strategy trades, leaving market participants out of pocket on
the other leg by an aggregate sum believed to be around A$80m
One Singapore-based trader told FO Week, There
was one trader who allegedly put on a negative spread as a
positive one and screwed up the outright prices. The exchange
busted the legs of the spread without taking into consideration
all the other positions that would be left high and dry. I am
sure Transmarket Singapore and NAB will go to court on this one
unless ASX settles out of court.
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