UBS client in spotlight on trading spike
Sources confirmed yesterday that ASIC does not believe that high-frequency trading was responsible for the spike. Photo: Brendan McDermid
THE corporate watchdog is analysing the trades of a client of global investment bank UBS in the wake of last Thursday's flash spike of a number of blue-chip stocks.
Yesterday it emerged that UBS placed the initial $200 million sell order of a number of major ASX stocks in the 30 minutes before the sharemarket opened last Thursday.
Just seconds before the market opened at 10am, that $200 million share order was revised down to just $56 million.
The $144 million change caught the market napping, and large fluctuations hit the share prices of ANZ Bank, Ansell, Aristocrat, Brambles and AGL, while Commonwealth Bank and Bank of Queensland also spiked when the ASX opened.
The mystery trades in ANZ pushed the share price up $1.67, or 6.5 per cent, when trading began at 10am.
The stock soared to $27.63 per share on the opening bell, before collapsing to $25.79 when the market closed.
BusinessDay believes that UBS has handed over details of the client who placed the orders to the Australian Securities and Investments Commission, which is conducting inquiries.
Sources confirmed yesterday that ASIC does not believe that high-frequency trading - the controversial practice of using computerised algorithms to execute rapid trades - was responsible for the spike.
The fact that last Thursday was the closing day for XJO Index Options - options traded on the S&P/ASX 200 Index - has raised suspicions that market manipulation was behind the spike.
The sudden change in price lifted the ASX 200 Futures Index to 4606, pushing it above the 4600 level for the first time since the GFC.
No evidence has yet emerged of suspect trading of those options within Australia.
Buyers big and small were caught out.
''I had a client place an order for $10,000 worth of ANZ stock in the morning,'' said one Melbourne-based stockbroker.
''That client lost more than 6 per cent the moment the market opened. There are many other similar stories. The small guys get hit because someone big is manipulating the stock.''
The identity of parties behind all trades is revealed after three days - called T+3 in the industry - and yesterday morning fingers were pointing at UBS as the broker.
UBS confirmed that it was one of its clients' orders, but had no further comment.