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Mystery trades hit ANZ, CBA stocks

Chart showing the spike and then sudden fall in the ANZ share price early today.

Chart showing the spike and then sudden fall in the ANZ share price early today. Photo: Bloomberg

Traders suspect that the share prices of a number of major ASX200 stocks - including ANZ Bank - were manipulated when trade opened this morning.

Mystery trades in ANZ pushed the share price of ANZ up $1.67, or 6.5 per cent, when trading began at 10am.

ANZ, which closed at $25.79 yesterday, soared to $27.63 per share on the opening bell, before the stock collapsed to $26.16.

In the first few minutes of trading about a third of the average daily number shares in ANZ changed hands. Large fluctuations hit the share prices of Ansell, Aristocrat and AGL, while Commonwealth Bank and Bank of Queensland also spiked when the ASX opened.

"I've had five of my brokers contact the ASX and they are clueless as to what has gone on," said one of Australia's leading stockbrokers.

"They are saying the trades fall within a reasonable range, but if a broker pushed a stock up five per cent we'd cop a $25,000 fine. Right now, I'd say this is in the 'too hard' basket for market control at the ASX."

 Watchdogs alerted

A spokesman for the body in charge of monitoring real-time trading — the Australian Securities Investment Commission — said it was ‘‘aware of a surge in ANZ share prices and was looking into the matter.’’

‘‘This is not a formal investigation,’’ he said.

ASX spokesman Matthew Gibbs said the price jumps were a result of buying orders, and nothing to do with the trading system itself.

‘‘There were a number of large buying orders at the market’s open, and the price of a number of stocks went up,’’ he said.

‘‘Most of them appear to have come down now and are trading at a normal price band. Naturally ASX is monitoring the situation.’’

Mr Gibbs said the ASX was so far aware of a price jump in AMP, ANZ, AGL, Aristocrat and Brambles stocks.

‘‘It’s certainly nothing to do with trading system,’’ he said.

Options affected

The trades were large enough to affect the price of options traded on the S&P/ASX 200 Index - commonly referred to in the investment world as XJO Index Options. The index tracks shares that form the S&P/ASX 200. The XJO Index rose to 4606 on the back of the moves, before settling back to 4575.

A number of brokers noted that those options expire at the close of trade today. The settlement price for those options will be calculated using today's 4606 opening price of the XJO index.

"I hope ASIC and the ASX investigate the ANZ open at $27.63 this morning," posted one reader on the BusinessDay markets blog. "It might just be a coincidence that index options expire today."

Brokers have called for the trades to be investigated immediately because they caused volatility on markets and could cause substantial losses.

"Someone has made big money on the Index trades this morning," said one major broker.

"Either that or an algorithm has gone haywire, a mistake has been made, or these trades are deliberate.' Either way, do we have an orderly market?"

Brokers have complained that the shift in responsibility for control of the market from the ASX to ASIC meant that nothing was done when trades of this nature caused alarm bells to ring.

"We rang the ASX, they said 'Ring ASIC'. We rang ASIC, they said 'Ring the ASX'," said one Melbourne-based broker.

With Georgia Wilkins

16 comments

  • Why not look into who make money in CFD trading? Margin trading? Stop loss trading? At a time when many traders expect a pull back and take short position after a nervous but steady run there must be a powerful manipulator to burn CFD shorter in a flash. If ASX is clue less then I should close my CFD account.

    Commenter
    Faizul
    Location
    Melbourne
    Date and time
    October 18, 2012, 3:03PM
    • ASX has nothing to do with CFDs
      There is no link except the names of the products you bet on.

      Commenter
      head shaker
      Location
      melbourne
      Date and time
      October 18, 2012, 5:00PM
  • If I was to guess, I would say it was some High Frequency Trading (HFT) program gone bonkers.

    Not the first time and won't be the last.

    Commenter
    Rainier Wolfcastle
    Location
    Springfiled
    Date and time
    October 18, 2012, 3:07PM
    • Just a coincidence all the companies were at the start of the alphabetic list??

      Commenter
      Scotty
      Date and time
      October 18, 2012, 3:08PM
      • Quoting from the article above: "We rang the ASX, they said 'Ring ASIC'. We rang ASIC, they said 'Ring the ASX'," said one Melbourne-based broker.

        That is an issue for an investigative report. It seems that ASIC still considers the ASX to be a market regulator. I've contacted ASIC to ask who vets IPO prospectuses, using the example of USA's Securities and Exchange Commissions review of IPO (S-1) documents, with the SEC review of Groupon's S-1 as a famous example.

        The SEC found that the Groupon S-1 confused managed transactions (in Australia this is often referred to as total transaction volume) and revenue (how much does the company keep sales revenue?).

        I got no answers. Is there an answer?

        Commenter
        Yours Truly
        Date and time
        October 18, 2012, 3:12PM
        • Whats the big mystery ? its clearly a trading algorithm going rogue.

          Commenter
          blah
          Date and time
          October 18, 2012, 3:26PM
          • The big mystery ? We all need to open our eyes bit more, then we really know what they are doing :p

            Commenter
            Anonymous1
            Date and time
            October 18, 2012, 4:16PM
        • Just like the black market crash, nobody knew how that started, suddenly bam everything gone... prob doing lots of secret bank transfers out of public eye.

          Commenter
          Anonymous1
          Date and time
          October 18, 2012, 3:34PM
          • Events like this should be of no concern. Regulation is a waste of time.

            If the market is being manipulated and cheated then smart investors need to learn manipulate and cheat better, otherwise they'll just be losers sucked in by the whole "integrity" scam.

            The free market rules, not regulation.

            Commenter
            Libertarian-Troll
            Date and time
            October 18, 2012, 3:49PM
            • Some good points.
              Scotty, it seems now it's NOT co-incidental the companies are from the start of the alphabet. ASX goes into pre-open at 10am with A's and B's, then at 10.02am with Cs-Fs.
              Is this simply an alorgithm gone wrong?
              From the people we are speaking with today, there may be more to it than that.
              Mark Hawthorne
              National Business Editor
              @HawthorneMark

              Commenter
              Mark Hawthorne
              Location
              Melbourne
              Date and time
              October 18, 2012, 3:50PM

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