Several insiders warn that Macquarie Bank’s recent compliance failures may signal a far broader problem in Australia’s financial sector. According to professional investor and writer Danielle Ecuyer, the industry is “riddled with dodgy transactions,” driven not by a conscious desire to break the law but by “greed” and a relentless pursuit of profit. “If there’s a more simple way to get to an optimal bottom line then they will probably pursue it,” Ecuyer said, noting that financial institutions are “innovative” by nature—often to the detriment of regulatory frameworks.
Lawyers, regulators and market participants alike describe this as an “iceberg” scenario: the visible enforcement actions against Macquarie may be only a small fraction of systemic misreporting, market manipulation and other compliance breaches that go undetected. As new financial products and trading strategies emerge, regulators struggle to keep pace, perpetually “chasing their tails,” Ecuyer adds, with automated screening tools largely confined to exchange-traded markets, leaving over-the-counter (OTC) transactions comparatively opaque.
READ MORE: ASIC Orders Macquarie Bank to Repair “Systemic and Significant” Compliance Failures
Macquarie Bank’s Compliance Failures Exposed
Australia’s largest investment bank, known colloquially as the “millionaire’s factory,” has come under fire from the Australian Securities and Investments Commission (ASIC) for what the regulator describes as “multiple and significant compliance failures.” In September 2024, ASIC imposed a record A$4.995 million fine on Macquarie for allowing suspicious orders to be placed in the electricity futures market. Yet, on May 7, ASIC Commissioner Simone Constant revealed that Macquarie terminals facilitated 11 further suspicious orders shortly after the initial penalty.
“We were particularly disappointed that Macquarie failed to prevent 11 suspicious orders being placed on the electricity futures market via Macquarie terminals shortly after ASIC had referred similar failures to the Markets Disciplinary Panel,” Constant told reporters. “Our intervention underscores our concern with the recurrent nature of Macquarie’s failures, which were caused by ineffective supervision and weak compliance and control management.” ASIC has now imposed additional licence conditions, mandating stricter oversight and reporting requirements for Macquarie’s derivatives desks.
Understanding Over-the-Counter Derivatives
The core of Macquarie’s transgressions lies in OTC derivatives—customised financial contracts traded directly between two parties rather than on formal exchanges like the ASX. These include bespoke electricity futures, which large energy consumers (for instance, aluminium smelters) use to lock in power prices. “Macquarie Bank would structure a product for a client that ensures they get electricity at the price they’ve agreed, and then on-sell that contract or retain it for upside exposure,” explains former Macquarie derivatives head Henry Jennings.
At a retail level, this resembles a household contracting to purchase electricity at $10 per quarter: if market prices fall to $8, the consumer pays a slight premium; if prices surge to $20, the contract holder—and anyone who buys that contract from them—enjoys the upside. Such instruments can mitigate price volatility but require rigorous reporting to avoid misuse, especially when traders exploit system loopholes to distort market benchmarks.
ANZ Bank Entangled in Bond-Rate Manipulation Allegations
Macquarie is not alone. ANZ Bank faces accusations of manipulating bond yields during a A$14 billion government debt issuance. By aggressively trading in interest-rate futures—bets on future monetary policy moves—ANZ allegedly drove up the futures reference rate used to set coupon payments on new bonds. “If that futures rate climbs, then so too does the coupon rate on the government’s new bond issues, increasing the government’s interest bill,” explains Associate Professor Mark Humphery-Jenner of the University of New South Wales.
In effect, ANZ is accused of engineering a higher yield environment to purchase government bonds at lower prices before the coupon reset—profiting at the expense of taxpayers. While investigations are ongoing, the allegations underscore how sophisticated trading tactics can slip through regulatory nets when OTC and exchange-traded activities intersect.
The Legacy of the Banking Royal Commission
Australia’s 2017 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry exposed a litany of unethical practices—ranging from fee-for-no-service arrangements to conflicted advice. Commissioned by then-Attorney General George Brandis and chaired by Justice Kenneth Hayne, the inquiry yielded 76 recommendations aimed at restoring integrity. However, critics note that many proposals stalled or were diluted in subsequent legislative debates.
In September 2023, the Albanese government enacted the Financial Accountability Regime (FAR), fulfilling the final major recommendation of the Royal Commission. FAR replaced the Banking Executive Accountability Regime, imposing stringent new accountability and reporting obligations on senior executives across banks, insurers and superannuation funds. Under FAR, institutions must clearly designate individuals responsible for compliance failures and establish consequence management frameworks for breaches.
Regulatory Challenges in a Rapidly Evolving Market
Despite these reforms, experts warn that regulators remain under-resourced to police a dynamic and innovation-driven industry. Automated surveillance tools effectively flag suspicious activity on centralised exchanges, but “in OTC derivatives, there’s a lot less of that type of automated screening,” notes Dr Humphery-Jenner. This gap creates fertile ground for illicit or borderline transactions that escape immediate detection.
ASIC’s ongoing pursuit of Macquarie—and its probing of ANZ—illustrates the tenuous balance between fostering financial innovation and enforcing compliance. “There’s certainly the risk of suspicious transactions being widespread,” Humphery-Jenner says. “Potentially there could be more illicit or illegal transactions lurking beneath that iceberg.” As market participants devise ever-more complex products, the regulator’s toolkit must expand to include real-time analytics, cross-market data sharing and increased collaboration with international counterparts.
Industry Perspectives on “Greed” and Compliance
Financial firms argue that the sector’s ingenuity drives economic growth and diversification, offering tailored risk-management solutions to corporate and retail clients. Yet, industry observers concede that a profit-first mindset can obscure ethical boundaries. “In the minds of the people doing it, it’s probably not consciously ‘we’re going out to break the system’ or be bad, but financial people are, by their nature, innovative,” Ecuyer says. “The motivation of greed—that’s humanity, that’s the way it works.”
Regulators, meanwhile, face a game of whack-a-mole: as soon as one loophole is closed, a new trading strategy emerges. ASIC Commissioner Constant has publicly called for parliament to grant ASIC more powers to impose higher penalties and extend its reach over non-bank entities, such as hedge funds and proprietary trading firms. She also advocates for enhanced whistleblower protections, noting that key informants in the Macquarie case suffered threats and even physical assault after refusing hush-money offers.
What’s Next for Australia’s Financial Sector?
In response to ASIC’s actions, Macquarie Bank released a statement affirming its commitment to market integrity and pledging to learn from compliance shortcomings. ANZ has similarly vowed full cooperation with ongoing investigations. Both institutions face the dual challenge of restoring public trust and adapting internal controls to meet FAR’s accountability standards.
Parliamentary committees are now examining whether FAR and existing penalties suffice to deter misconduct, or whether structural changes—such as ring-fencing trading desks from customer-facing operations—are warranted. Meanwhile, private-sector compliance teams are investing in machine-learning platforms capable of analyzing vast troves of transaction data for anomalies. Industry associations have convened working groups to develop best-practice guidelines for OTC derivatives reporting.
Conclusion: The Hidden Depths of Systemic Risk
Macquarie Bank’s headline-grabbing compliance failures may represent only the tip of an iceberg in Australia’s finance industry. As banks, brokers and funds continually innovate to meet client demands and enhance profitability, the risk of regulatory arbitrage—and outright illegality—grows. With regulatory resources stretched thin and OTC markets less transparent than exchange-traded venues, ASIC’s challenge is formidable.
Yet, the stakes could not be higher. Widespread misconduct in derivatives and bond markets threatens not only the integrity of financial benchmarks but also the stability of corporate finance, government borrowing costs and ultimately, household wealth. If the industry’s “greed” remains unchecked, systemic vulnerabilities may multiply beneath the surface, ready to wreak havoc when the next market shock arrives. The question now is whether regulators, institutions and lawmakers can collaborate swiftly enough to prevent a deeper crisis—before the hidden mass under the iceberg breaks away.
