Tauranga-based brokerage Craigs Investment Partners has been censured and fined $45,000 by the NZ Markets Disciplinary Tribunal over two breaches of NZX trading rules related to Telecom and Rubicon shares.
The tribunal ruled that Craigs could not escape blame even though it had argued the erroneous trades were not caught by filters installed by its trading system provider.
According to the tribunal's statement, a direct market access client used Craigs trading system on August 2 last year to enter an order on the NZX trading system to buy 640,000 Telecom shares.
No price was specified but the order was immediately matched against more than 17 sell orders and resulted in a 23 per cent increase in Telecom's traded share price from $2.68 to $3.31, a 23.5 per cent increase, the tribunal said.
Craigs said the client entered the order in error and Telecom stock was subsequently halted and 52 trades cancelled.
On November 15, the same client entered an order to buy 30,000 Rubicon shares, which was immediately matched against three sell orders, resulting in a 48 per cent spike in Rubicon's traded price from 39 cents to 58c. Again the trades were cancelled.
"Both orders created considerable market disruption," the tribunal said. It imposed a fine of $35,000 for the Telecom breaches and $10,000 for the Rubicon breaches and ordered Craigs to pay the tribunal's costs.
"Participants are responsible for their own trades; the rules do not entitle them to point the finger at anyone else if things go wrong," it said.
"If participants choose to utilise third party providers, they must also insist that those providers are similarly vigilant to ensure errors of this kind do not occur."
NZN