ASIC has launched civil penalty proceedings in the Federal Court against COFCO International Australia Pty Ltd and COFCO Resources SA alleging the companies manipulated the ASX24 market for Eastern Australia Wheat futures January 2023 (WMF3) contracts.
ASIC alleges COFCO manipulated contracts on 34 occasions between 17 January 2022 and 3 March 2022, placing orders shortly before the close of the day session of the ASX24 for the improper purpose of affecting the daily settlement price for the WMF3 contract. This conduct is commonly referred to as ‘marking the close’.
ASIC alleges that these orders had the effect of:
causing the price for WMF3 contracts to not reflect the forces of genuine supply and demand in an open, informed and efficient market, and
creating artificial prices for WMF3 contracts on the ASX24.
ASIC Chair, Joe Longo said, ‘ASIC is committed to responding to market manipulation in energy and commodities markets. This conduct is illegal; it erodes trust and confidence in our markets, increases costs for participants, hurts farmers, food manufacturers, importers and exporters, and impacts the prices Australians pay at the checkout.’
‘We allege these companies engaged in a repeated pattern of manipulation to benefit themselves to the detriment of other participants in the market.
‘Fairness in commodities markets has never been more important. Consumers and economies have felt the impact of distorted supply chains through the pandemic, the Russia Ukraine war and through increases in the cost of living.
‘We have the systems, people and powers to identify misconduct and will not hesitate to take action against those manipulating our markets,’ Mr Longo said.
ASIC is seeking declarations and pecuniary penalties against both COFCO International Australia Pty Ltd and COFCO Resources SA.
The matter will be listed for a case management hearing on a date to be fixed by the Court.
