Petra Capital fined for failing to report regulatory data accurately

Sydney-based brokerage firm Petra Capital Pty Ltd recently faced a fine of $205,350 from the Markets Disciplinary Panel (MDP) for inaccurately reporting regulatory data over 3,600 times. An investigation conducted by the Australian Securities and Investments Commission (ASIC) revealed that Petra Capital had failed to provide precise information, specifically a unique code that identifies clients involved in executing orders or transactions.

The MDP found that Petra Capital’s inconsistent use of client reference information in its regulatory data reporting caused one client to appear as multiple clients on 3,632 occasions. This discrepancy was attributed to a system update and affected a total of 14,741 trades conducted between March 3, 2022, and December 5, 2023. The MDP deemed Petra Capital’s actions as careless, emphasizing that the firm should have taken proactive measures to ensure that its reporting format was in line with legal requirements. This includes regularly reviewing its systems and the underlying assumptions of its coding structure.

The MDP underscored the critical importance of market participants providing accurate regulatory data, especially consistent client reference information. This data is essential for ASIC to carry out market surveillance effectively to identify potential connections between individuals and trades, aiding in detecting market misconduct such as insider trading and market manipulation.

ASIC and the MDP issued a reminder to all market participants to conduct annual reviews and testing of their systems. Compliance teams should be actively involved in technical aspects, particularly in the collection and submission of regulatory data. Additionally, market participants that rely on external expertise for regulatory reporting should perform their own reviews and testing to ensure compliance.

Petra Capital is a small Australian stockbroking firm catering to wholesale financial clients and ASX-listed companies. The company operates as a market participant of ASX Limited and Cboe Australia Limited. In a Market Integrity Update published by ASIC in September 2021, market participants were reminded of their obligations to provide accurate and complete regulatory data. The update also highlighted that several infringement notices had been issued by the MDP to address non-compliance with regulatory data obligations.

Petra Capital has since complied with the infringement notice and paid the imposed penalty. It is important to note that compliance with the infringement notice does not constitute an admission of guilt or liability, nor does it imply a violation of the relevant section of the Corporations Act 2001. For more information, the infringement notice can be viewed on ASIC’s MDP Outcomes Register.