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Friday 17 November 2017

17-392MR ASIC makes consolidated market integrity rules

ASIC has today made market integrity rules which consolidate 13 of the existing 14 rule books into four rule books to create a common set of rules for securities markets and a common set of rules for futures markets.

  • The ASIC Market Integrity Rules (Securities Markets) 2017 (Securities Markets rules) set out obligations and prohibitions applying to activities and conduct on the ASX, Chi-X, NSXA, SSX, IR Plus securities markets as well as competition between securities markets;
  • The ASIC Market Integrity Rules (Futures Markets) 2017 (Futures Markets rules) apply to activities and conduct on the ASX 24 and FEX futures markets;
  • The ASIC Market Integrity Rules (Securities Markets – Capital) 2017 (Securities Capital rules) set out capital and reporting requirements for participants of the securities markets; and
  • The ASIC Market Integrity Rules (Futures Markets – Capital) 2017 (Futures Capital rules) set out capital and reporting requirements for participants of the futures markets.

Commissioner Cathie Armour said, ‘Our consolidation of the market integrity rules reduces red tape for market participants trading on Australia’s securities and futures exchanges by halving the total length of the rules and removing confusion arising from rule differences between markets. Rule consolidation also sets us up for the future by streamlining our review, consultation and amendment of the market integrity rules in years to come.’

ASIC worked closely with market operators and consulted with industry on changes to the market integrity rules. Published today, Report 547 Response to submissions on CP 277 Proposals to consolidate the ASIC market integrity rules (REP 547) sets out feedback from our consultation.

As proposed, ASIC also clarified obligations in the market integrity rules for:

  • participants’ management requirements and responsible executives;
  • dealing ‘as principal’
  • block trades and large portfolio trades; and
  • record keeping requirements for market operators.

Most market operators and market participants will have to comply with the consolidated market integrity rules from Monday 7 May 2018. Before then, ASIC will:

  • reissue all class rule waivers and individual rule waivers that remain in force; and
  • update our regulatory guides to reflect consolidation of the market integrity rules and provide enhanced guidance on ASIC's expectations about management structures.

Some transitional arrangements apply for the NSXA, IR Plus and SSX markets. NSXA and its participants will transition to the Securities Markets and Securities Capital rules in stages:

  • From Monday 4 December 2017—NSXA participants using their systems for automated order processing must comply with the Securities Capital rules and Parts 5.5, 5.6 and 5.7 of the Securities Markets rules;
  • From Monday 5 November 2018—NSXA and its participants must comply with the Securities Markets rules; and
  • From Monday 6 May 2019—all NSXA participants must comply with the Securities Capital rules.

ASIC will also grant transitional relief for three years to the IR Plus, NSXA, SSX markets and their participants from the rules derived from the ASIC Market Integrity Rules (Competition in Exchange Markets) 2011, other than a small number of rules that promote market integrity but are not specific to competition between markets.

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Background

ASIC is responsible for supervising domestic licensed markets and making market integrity rules. ASIC assumed responsibility for market supervision and real-time surveillance of trading from ASX on 1 August 2010.

At present, there are six domestic licensed markets for securities, operated by:

  1. ASX Limited (ASX)
  2. Chi-X Australia Pty Limited (Chi-X)
  3. IMB Limited (IMB)
  4. IR Plus Securities Exchange Limited (IR Plus) (formerly SIM Venture Securities Exchange Limited (SIM VSE))
  5. National Stock Exchange of Australia Limited (NSXA), and
  6. Sydney Stock Exchange Limited (SSX) (formerly Asia Pacific Stock Exchange Limited (APX)).

In addition, there are two domestic licensed markets for futures products, operated by:

  1. Australian Securities Exchange Limited (ASX 24) (formerly Sydney Futures Exchange Limited (SFE)), and
  2. FEX Global Pty Ltd (FEX).

The market integrity rules for the IMB market are not included in the consolidation of the market integrity rules because of the unique nature of that market (which offers trading solely in IMB securities) and the bespoke nature of those rules.

ASIC is committed to reducing red tape for market participants by administering the law efficiently with a minimum of procedural requirements. Our previous work in this area includes repealing a number of market integrity rules in May 2015 (refer: 15-097MR).

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Last updated: 17/11/2017 11:04