ASX PureMatch
ASX has announced plans to introduce PureMatch, a new pre-trade transparent order book that will provide for trading in a subset of ASX listed securities. Purematch will operate in parallel to TradeMatch, the existing ASX order book (see ASX's Broker Factsheet: PureMatch – an alternative service offering on ASX Trade, 31 May 2011).
Systems and testing
The rule changes required for the introduction of PureMatch are subject to Ministerial disallowance. ASIC will advise the Minister that the rules and the new order book should only commence once ASIC is satisfied that the order book and its prospective users are operationally ready. To assist us in reaching that view, ASX will be required to demonstrate that PureMatch has undergone robust testing, including confirmation by an independent expert:
(a) |
of the adequacy of ASX's testing governance framework for testing PureMatch |
(b) |
verifying that prospective participants and data vendors have attested that they are operationally ready for the commencement PureMatch; and |
(c) |
the adequacy and results of ASX's testing of PureMatch, according to the governance framework. |
ASIC is working closely with ASX and industry participants to ensure that the introduction of PureMatch does not put at risk the orderliness and integrity of the market or ASIC's ability to conduct adequate market surveillance. To date, industry has raised concerns about the readiness and robustness of systems if PureMatch were to commence at or about the time of Chi-X's commencement, intended for 31 October 2011 at the earliest. ASIC shares this concern and agrees we need to consider the changes to markets on a holistic basis.
Industry has also raised concerns with the system implications of PureMatch's commencement for the calculation of the consolidated best bid and offer data for the 'at or within the spread' pre-trade transparency exception (MIR 4.2.3). To address this, ASIC will not require participants and market operators to include PureMatch market data in their consolidated best bid and offer data until 1 March 2012 or until PureMatch commences operation, whichever is later.
Market participant certification of AOP systems
Participants will have to certify or further certify (for a material change) their automated order processing (AOP) systems before they can be used for PureMatch under Part 5.6 of the ASIC Market Integrity Rules (ASX Market) 2010. ASIC will work with participants if they wish to submit their PureMatch-related AOP certifications at the same time as their AOP certification relating to the introduction of Chi-X.
PureMatch commencement
Against this background, we cannot envisage a start of PureMatch earlier than end November 2011. Timing is contingent on the matters discussed above, as well as any industry readiness issues we become aware of in the coming months. Any such issues may impact the timing of the introduction of PureMatch.
ASIC Website: Printed 05/17/2012
