Australia’s securities regulator is tracking transactions that caused a sudden jump in the local currency ahead of the Reserve Bank of Australia’s interest-rate decision and is looking at potential sources for any leak of the information as part of its investigation.
The Australian dollar surged more than 0.6 percent in the minute before the central bank unexpectedly refrained from cutting rates March 3. That prompted Treasurer Joe Hockey to contact RBA Governor Glenn Stevens to express his concern about the sudden move, and the Australian Securities and Investments Commission to look into the matter.
“There are two ends to this,” ASIC Chairman Greg Medcraft said on the sidelines of a conference in Sydney Monday. “You have to look at tracing back the trades, which we are doing. And then you have to look at where the potential source was, if there was something. We’re working on it.”
The Australian dollar climbed from 77.74 U.S. cents at 2:29 p.m. in Sydney on the day of the policy decision to reach 78.22 cents 26 seconds later, data compiled by Bloomberg show. At 2:30 p.m. the RBA announced its decision, spurring the Aussie to a peak of 78.42 cents.
The increase in the use of high-frequency trading has spurred concern that algorithm-driven orders can lead to distortions for stock, bond and equity markets around major data releases. Australia’s securities regulator said almost a year ago it will conduct inquiries into the nation’s foreign exchange market amid international probes of alleged manipulation of benchmark currency rates.