media release (15-205MR)

ASIC marks five years of listed market supervision

Published

ASIC has marked five years since it took over responsibility for the supervision of real-time trading on Australia's licensed securities and derivatives markets from the Australian Securities Exchange on 1 August 2010.

ASIC Commissioner Ms Cathie Armour said, 'Over the past five years, the nature of the markets ASIC supervises has changed dramatically and the scope of its responsibilities increased. ASIC has not only kept pace with the speed of this transformation, it has implemented world-leading technologies and achieved significant efficiencies during this period.

'Today, ASIC supervises 125 market participants, trading across seven equities and futures markets, on which securities of more than 2,000 listed entities are traded and more than 960,000 trades made per day, compared with 520,000 in 2010.

'Throughout all of this, our priority has remained the same – to promote investor trust and confidence through fair, orderly and efficient markets', Ms Armour said.

Key developments arising from the transfer of supervision include:

  • the introduction of competition in equity trading in Australia. Chi-X commenced operating its financial market on 31 October 2011. This was accomopanied by the introduction of a range of new trading platforms, products and order types on both the ASX and Chi-X markets,
  • establishment of the Markets Disciplinary Panel, an independent peer review body, to determine alleged breaches of the ASIC market integrity rules. The MDP has issued 37 infringement notices, resulting in total pecuniary penalties of $2,304,800 since the first decision was first published in September 2011. All of these notices have been complied with (including for contested matters), and
  • monitoring of participant conduct based on a relationship management model, facilitating ongoing and frequent participant engagement with ASIC in day-to-day operations. Over the past year, ASIC's market supervision team has conducted 251 industry meetings, including 99 compliance liaison meetings with participants, and completed a further 25 risk assessment meetings.

ASIC has invested heavily in new technologies and systems as part of our monitoring and supervisory responsibilities. In May 2012, the Federal Government committed to fund four key deliverables as part of the Flexible Advanced Surveillance Technologies (FAST) project, a multi-year program of work.

The first of these, the Markets Analysis and Intelligence (MAI) surveillance system, was implemented in  2013, replacing the SMARTS surveillance system. Using MAI, the time taken to conduct searches of trading activity has been reduced from months or weeks to minutes (in some instances). MAI's enhanced functionality means that trade monitoring and post-trade analysis can now be conducted by three less staff than before. 

In addition to its real-time surveillance capabilities, MAI also enables ASIC to interrogate very large data sets and as analyse granular information on the behaviour of traders.

The second key deliverable, the Market Entity Compliance Project (MECS) has been progressively rolled out to market participants and market operators in Australia through June & July 2015. MECS is a regulatory compliance portal that provides market entities with tools and information to assist in complying with their Market Integrity regulatory obligations.

Ms Armour said the structural and physical co-location of market supervision and enforcement functions within the same agency for the past five years had significantly enhanced ASIC's ability to identify and prosecute market misconduct.

'ASIC is one of the few jurisdictions where responsibility for supervision and enforcement lies within the same regulatory agency and is the only member of the Intermarket Surveillance Group (which includes all the major front-line surveillance organisations in the world) that is also a government regulator.

'The time taken to identify misconduct and commence a formal investigation has halved from more than three months prior to 2010, to six weeks. In many serious cases, investigations are commenced within days of identifying serious market misconduct issues, allowing ASIC's experienced investigators to secure evidence prior to its possible destruction or accidental deletion and to commence questioning interested parties sooner.

'Overall, there has been a 23% reduction in the time between ASIC first becoming aware of potential criminal misconduct to handing the matter over to the Commonwealth Director of Public Prosecutions', Ms Armour said.

Ms Armour said at the core of its market surveillance and enforcement functions was a highly qualified and dedicated workforce. The Market Integrity Group now employs 230 staff, with more than half the staff who transferred from the ASX on 1 August 2010 remaining with ASIC today.

'The integrity of Australia's licensed markets and effective regulation are inextricably linked. ASIC is proud of its achievements in the last five years. We have the systems, we have the people and we have the powers and we will find people who may be tempted to do the wrong thing', Ms Armour said.

Media enquiries: Contact ASIC Media Unit