Bursa fines dealer’s rep RM100,000 for trading misconduct

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KUALA LUMPUR (Sept 30): Bursa Malaysia Securities Bhd has publicly reprimanded and imposed a fine of RM100,000 on dealer’s representative Fintan Romuald Inbaraj Nicholas for trading misconduct  that caused a significant price fluctuation in eight counters.

The eight counters are Star Publications (M) Bhd, JCY International Bhd, Batu Kawan  Bhd, Coastal Contracts Bhd, CB Industrial Product Holding Bhd, Hap Seng Plantations Holdings Bhd, TDM Bhd (TDM) and Berjaya Sports Toto Bhd.

Execution of trades in these stocks by Fintan had impacted their closing price "to hit at or near the limit up/down price" on June 21 last year, the exchange said in a statement today.

Fintan was then a salaried dealer's representative and inter-broker dealing team head at Kenanga Investment Bank Bhd’s principal office here.

Fintan was found to have contravened Rules 3.14(e) and (g) and/or Rule 5.01(b) of the Rules of Bursa Malaysia Securities.

Rules 3.14 e and g touche on the need to practice due diligence and ensure that their actions contribute to the "maintenance of an orderly and fair stock market", and Rule 5.01 on the need to not act in a manner that disturbs the order of the market.

Fintan was reprimanded under Rule 15.02, which provides for disciplinary actions that can be taken should there be an offence, including a fine of up to RM 1 million.

According to Bursa Malaysia, the execution dealers of Kenanga’s inter-broker dealing under Fintan's purview, had entered buy or sell orders of the affected counters for a client as part of the client's portfolio rebalancing, at prices which were significantly far away from the market price and at or near limit up or down prices.

This action had "adversely affected the Theoretical Closing Price (TCP) of the said 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 counters (of buy orders) which hit at or near limit up price and significant decrease in the closing price of six counters (of sell orders) which hit at or near limit down price".

It had also distorted the discovery of the counter's fair price, the exchange said.

Fintan should have considered the consequences of entering orders at a price rates which were significantly different from the market prices, it added.

"(Fintan should have also) assessed the liquidity for each of the counters, taking into account amongst others, the magnitude of the client's orders vis-a-vis the opposing orders in the market in respect of these counters, at the material time prior to execution of the orders," said Bursa Malaysia.

He had failed to undertake these assessments but had gone ahead with his decisions, among others on the assumption that there was general liquidity of counters on a rebalancing day, it said.

Fintan, it added, is also required to undergo training on professional conduct of dealer's representatives and market offences, on top of the fine.