ASIC Market Supervision Update issue 16
Market competition is go
ASIC has welcomed the successful launch of alternative stock market operator Chi-X, which opened for business at 10am on 31 October 2011. A significant milestone, it is a major change to Australia's financial market and has been touted by some as ringing in a new trading era.
The Federal Government has similarly welcomed the launch of the new securities exchange, which fulfils the government's promise to open up Australia's equity market to competition. The government deems this vital for the continued development of Australia as a financial services centre.
The launch of Chi-X is a significant achievement for all involved, and ASIC thanks its staff, and all stakeholders and industry participants that have assisted in transforming the policy into a reality, all of whom are similarly crucial to the fair and orderly operation of our financial markets.
ASIC consulting on broader market structure
On 20 October, ASIC released a second-phase consultation paper on equity market structure issues arising from recent and anticipated developments in Australia's financial markets.
Consultation Paper 168 Australian equity market structure: Further proposals (CP 168), is seeking views on proposed market integrity rules relating to:
- automated trading including high frequency trading;
- volatility controls for extreme price movements;
- enhanced data for supervision;
- the product scope of best execution; and
- pre-trade transparency and price formation in the market.
CP 168 builds on the findings of Consultation Paper 145 Australian equity market structure: Proposals (CP 145), issued in November 2010 which dealt with issues related to the introduction of competition to exchange markets in Australia and the release on 29 April 2011 of new market integrity rules for competition. It is these rules that now provide a robust regulatory framework that enabled the introduction of competition, and are intended to manage existing issues such as dark pools, high frequency trading, the automated trading environment and order entry controls. ASIC recognises that competition will increase activity in areas of automation and associated trading activities, which has already been occurring in the market for some years. CP 168 proposes enhancements to buttress the already robust regime in place.
A copy of CP 168 can be found on the ASIC website and submissions can be made up until the 20 January 2012. As always, ASIC looks forward to the industry's contribution to this process.
ASIC has confirmed it is satisfied that ASX, prospective participants and data vendors are ready for ASX’s new order book PureMatch to commence operating from 28 November 2011.
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 firstname.lastname@example.org, or through your relationship manager.
For more information
Please see www.asic.gov.au/market-supervision.