The markets regulator, ASIC, has launched civil legal action against subsidiaries of COFCO, China’s biggest food processor and manufacturer, alleging they "manipulated the ASX24 market for Eastern Australia Wheat futures January 2023 contracts.”
(COFCO Group is China's largest food processor, manufacturer, and trader. It is also one of Asia's leading agribusiness groups. Its headquarters are in the COFCO Fortune Plaza in Chaoyang District in Beijing. Its owner is the State-owned Assets Supervision and Administration Commission of the State Council, China’s highest day-to-day administrative body.)
The civil penalty legal action was launched in the Federal Court by ASIC on Wednesday against two COFCO groups: COFCO International Australia Pty Ltd and COFCO Resources SA.
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 in Thursday’s statement, "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."
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.
