BURSA FINES FINTAN ROMUALD INBARAJ NICHOLAS FOR TRADING MISCONDUCT 30 Sep 2014
Bursa has publicly reprimanded and imposed a fine of RM100,000 on Fintan Romuald Inbaraj Nicholas (FINTAN) for trading misconduct which involved execution of trades that caused significant price fluctuation in eight (8) counters, namely STAR, JCY, BKAWAN, COASTAL, CBIP, HSPLANT, TDM and BJTOTO (8 Affected Counters) and impacted these securities closing price to hit at or near the limit up/down price on 21 June 2013. FINTAN, who was at the material time of the breach a Salaried Dealers Representative (SDR) (cum Head of Inter-Broke Dealing team) of Kenanga Investment Bank Bhd (KIBB) at its Principal Office.
The finding of the breach and the imposition of the sanctions on FINTAN was made after taking into consideration all facts and circumstances, including that:
- Based on FINTANs instruction, the execution dealers of KIBBs Inter-Broke Dealing team under the charge of FINTAN had entered buy/sell orders of the 8 Affected Counters for a client as part of the clients portfolio rebalancing (in a market on close order) at prices which were significantly far away from the market price and at/near limit up or down prices for the 8 Affected Counters on 21 June 2013.
- The entries of these orders on 21 June 2013 had:
- adversely affected or impacted the Theoretical Closing Price (TCP) of the 8 Affected Counters during the Pre-Closing phase and/or the Trading At Last phase giving rise to the significant increase in the closing price of two (2) counters (of buy orders) which hit at or near limit up price and significant decrease in the closing price of six (6) counters (of sell orders) which hit at or near limit down price; and
- distorted the discovery of the fair price of the 8 Affected Counters.
- In undertaking any trading strategy and executing/instructing the execution of these orders towards fulfilling clients orders, FINTAN should have undertaken the following:-
- considered the effects, risks and consequences of entering orders at prices which were significantly far from the market price of the 8 Affected Counters;
- assessed the liquidity for each of the counters taking into account, amongst others, the magnitude of the clients orders vis-a-vis the opposing orders in the market in respect of these counters at the material time prior to/of execution of the orders; and
- closely monitored/ensured close monitoring of the orders entered;
FINTAN however had failed to undertake such assessment and monitoring and had unreasonably executed/instructed the execution of these orders based on, amongst others, an assumption that there was generally liquidity of counters on a rebalancing day..