A Top Researcher Says Some Australian Fund Mangers Are Manipulating The Market To Boost Their Bonuses

A leading researcher says Australian fund managers are trying to boost their bonuses with last minute trades (photo: Getty)

A leading researcher says market manipulation is prevalent in Australia, with trading spikes seen before the close caused by fund managers attempting to boost their bonuses.

“They are getting money in all the time but instead of buying it every day they save it and buy it at the last minute to drive more demand,” chief executive of the federal ­government-backed Capital Markets Co-operative Research Centre, Michael Aitken, told The Australian Financial Review.

Research shows spikes in trading before the end of each month, quarter and financial year are more common in Australia than in other comparative markets. Fund managers’ investment performance is measured on these timeframes.

There’s an example used in the Fin’s report. $23 million worth of three stocks — Village Roadshow, Ocean Gold and REA — was traded in the last 15 minutes before 4pm on December 20 last year. On Friday last week, there was $23 million traded over the entire day.

According to the Fin’s report, the average ratio of market dislocation to trading turnover on the ASX is 3.7 basis points, far higher than other markets including Hong Kong (0.06), London (0.04) and the Indian stock exchange (0.41).

“Volatility in the end of day price is quite a problem in this marketplace,” Aitken said. “The price is dramatically bouncing around at the end of the day.”

The Capital Markets Co-operative Research Centre is backed by government funding, and was founded through a federal Department of Education Science and Technology CRC program (now run by Department of Industry).

There’s more here.

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