ASIC Market Supervision Update Issue 33

Other issues

ASIC finalises regulatory framework for retail trading of Commonwealth Government Securities

On 27 March, ASIC announced it had amended existing market integrity rules and related guidance to help with the introduction of retail trading of Commonwealth Government Securities (CGS) depository interest on the ASX. The rules are one key element of the regulatory framework for the retail trading of CGS on public exchanges.

To reflect these changes, ASIC has updated Regulatory Guidance 223 Guidance on ASIC market integrity rules for competition in exchange markets (RG 223).

It provides guidance on how market operators and market participants can comply with their obligations under the competition market integrity rules.

Depository interests are beneficial interests in the underlying security, and provide the holder with the same economic rights as if they were the legal holder of the CGS. While professional investors could previously trade in CGS on over-the-counter (OTC) markets, these amendments now mean retail investors can gain exposure to CGS through trading depository interests on public exchanges. Depository interests can be traded on retail-accessible markets, such as the ASX, and in a manner similar to trading shares.

The changes facilitate the Australian Government's initiative to encourage retail investors to trade, and are part of the Government's 'Competitive and Sustainable Banking System' package, which was released on 12 December 2010.

 

ASIC proposes draft rules related to OTC derivatives

ASIC recently proposed new draft rules addressing the mandatory trade reporting obligations for over-the-counter (OTC) derivatives such as interest rate swaps. These proposals continue Australia's progress in meeting its G20 commitments to OTC derivatives reform. It follows extensive consultation by ASIC on the proposals for the licensing and regulation of derivative trade repositories.

Consultation Paper 205 Derivative transaction reporting (CP 205) proposes rules governing the reporting of OTC derivative transactions to derivative trade repositories. CP 205 covers issues such as which institutions will need to report to trade repositories, what information will need to be reported, and when the reporting obligation will start for different classes of reporting entities. ASIC invites submissions on the proposed rules.

The rules aim to comply with internationally-agreed standards on transaction reporting developed by the International Organization of Securities Commissions (IOSCO) and the Committee on Payment and Settlement Systems (CPSS). In drafting the proposed rules, ASIC also considered the transaction reporting regimes being implemented in other parts of the world. This was to ensure consistency by identifying and seeking to mitigate any conflicting or overlapping rules across jurisdictions.

Under ASIC’s proposals:

  • major financial institutions (being those with at least $50 billion of notional outstanding positions in OTC derivatives on 30 September 2013) would be subject to a reporting obligation in some asset classes from 31 December 2013; and
  • other smaller financial institutions would be subject to a reporting obligation in some asset classes from 30 June 2014.

Submissions to the proposals are due by 1 May 2013.

 

IOSCO releases consultation report on market structure regulatory issues

The International Organization of Securities Commissions (IOSCO) recently published a consultation report on 'Regulatory issues raised by changes in market structure'. The report identifies possible outstanding issues and risks posed by existing or developing market structures, and also provides recommendations to address these potential risks.

The consultation forms part of IOSCO's response to the request by the G20 in 2010, that IOSCO develop recommendations that will promote the integrity and efficiency of markets. Specifically, the recommendations should mitigate the risks posed to the financial system by the latest markets technological developments. IOSCO seeks to gather evidence and views for developing possible recommendations that will promote market liquidity and efficiency, price transparency, and investors' execution quality in a fragmented environment.

The report makes recommendations to monitor the impact of fragmentation on market integrity and efficiency, trade information, order handling rules and best execution, access to liquidity, and market efficiency and resilience.

The closing date for comments is 10 May 2013.

 

Contact ASIC

Market participants should contact ASIC for market integrity issues and ASX and Chi-X respectively 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.

Last updated: 30/03/2021 09:35