ASIC Market Supervision Update issue 11

Previous issues

ASIC has received questions from the industry about the interpretation and application of the new competition market integrity rules and the introduction of competition.

This newsletter includes information on the introduction of ASX's PureMatch and some frequently asked questions on a range of issues raised by industry about pre-trade transparency exceptions, certification of automated order processing systems, and best execution.

This newsletter supplements our guidance in Regulatory Guide 223: Guidance on ASIC market integrity rules for competition in exchange markets (RG 223). This is the first in what may be a number of communications.

Workshop on best execution and other compliance matters

ASIC intends to hold a workshop for market participants on 22 July on best execution and other compliance matters associated with the new competition market integrity rules. Further details will be emailed to participants over coming days.

Introduction of ASX's 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.

More about PureMatch

Further operational changes

ASIC's approach to the introduction of competition has been to implement a regulatory framework that reflects the minimum needed for the commencement of competition and that will minimise system changes for industry and maintain market integrity. This reflects industry feedback to our consultation on Australian equity market structure in November 2010.

Against this background, ASIC will assess further market operator and participant operational changes in 2011 on a holistic basis to minimise the impact on participant readiness for competition and to maintain fair, orderly and transparent markets during the next phase of change.


FAQs - Competition market integrity rules and implementation issues

Pre-trade transparency exception – MIR4.2.3 'at or within the spread'


1. How does this exception differ from ASX's priority crossing rule?

2. What order information must participants consider in determining whether a trade is able to rely on this exception?

3. How does this exception apply when the best bid and offer are the same (i.e. a locked market)?

4. How does this exception apply when the best bid exceeds the best offer (i.e. a crossed market)?

5. How does this exception apply when there is only one of either a published bid or offer (i.e. there is no spread)?

6. Will market operators in their role as publication venues validate that trades reported to them and that rely on this exception are actually at or within the spread?

7. What controls does ASIC expect participants to have to comply with this exception?

8. What minimum expectations does ASIC have about the compilation of a consolidated tape of best available bids and offers for the purposes of this exception?

 

Other pre-trade transparency exceptions

9. Will market operators in their role as publication venues validate that trades reported to them and that rely on other pre-trade transparency exceptions comply with the exception?

 

Automated order processing (AOP)

10. Should AOP filters and checks be based on a market by market assessment or on a whole-of–market assessment?

11. Do ASX market participants need to re-certify their AOP systems in order to connect to Chi-X and/or PureMatch?

 

Best execution

 12. Do I need to connect and route client orders to Chi-X and/or PureMatch?

13. What transitional arrangements are in place for best execution?

14. How does best execution apply in a chain of execution?

15. Can I opt my wholesale clients out of best execution?

16. What are ASIC's expectations about disclosing the detail of best execution policies to clients?


Contact ASIC

Market participants should contact ASIC for market integrity issues and ASX for operational issues. Contact ASIC’s Market and Participant Supervision group on 1300 029 454 and you will have these voice menu options:

  • Option 1 for real time market matters
  • Option 2 for other market related matters
  • Option 3 for Participant enquiries or matters
  • Option 4 for Market wide announcements.

Or you can reach the Market and Participant Team by email market.participants@asic.gov.au, or through your relationship manager.

 

For more information
Please see www.asic.gov.au/market-supervision.

More about our newsletter...

ASIC's Market supervision update is a periodic eNewsletter from the Australian Securities & Investments Commission, 100 Market Street, Sydney, NSW, Australia, 2000. You are receiving this because you asked to be put on the mailing list.

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Last updated: 30/03/2021 09:35