ASIC Market Supervision Update Issue 6
ASIC amends ASIC Market Integrity Rules (ASX Market) 2010
The Australian Securities and Investments Commission (ASIC) announced today it has made an amendment to Rule 2.1.4(2)(b)(i) of the ASIC Market Integrity Rules (ASX Market) 2010.
Rule 2.1.4(2) sets out the criteria a market participant may take into account in assessing whether a person is of good fame and character and high business integrity for the purposes of the Rules.
The amendment made by ASIC removes the criteria relating to a person having been 'charged with' an offence. The criteria was carried over from the ASX rules in effect before 1 August 2010.
The amendment addresses concerns raised with ASIC by the Senate Standing Committee on Regulations and Ordinances during the process of Parliamentary scrutiny of the Rules. The function of the Committee is to examine all legislative instruments subject to disallowance or disapproval by the Senate to ensure they comply with broad principles of personal rights and parliamentary propriety.
The Committee expressed concern that under subrule 2.1.4(2)(b)(i), where a person has been charged with (but not yet convicted of) an offence, that charge could count against their good fame and character. The Committee noted the possible detrimental impact for a person that may arise out of such an assessment and asked that it be reviewed outside ASIC's timetable for an overall review of the rules. In order to ensure certainty for the market the 'charged with' an offence has been removed from the current Rules.
The amendment takes effect on 11 February 2011.
Prior to 1 August 2010, the Procedures, Determinations and Practice Notes (PDP) for SFE Operating Rule 1.13 "Error Trade Records" provided that records of Error Trades should contain "a description of the trade including the deal number". Participants should note that this is now a requirement under the ASIC/ASX 24 MIRs, specifically Rule 2.2.4(3)(a) which relevantly states:
A Market Participant must maintain a separate record of all Error Trades for a period of not less than five (5) years from the date of a Trade, containing ... a description of the Trade including the deal number supplied by the Market Operator (if any) ...
Exchange for physical transactions
Recent reviews have identified that not all market participants are complying with the requirements of ASIC/ASX 24 MIR 2.2.4(1) "Order records and accounting records: Client orders" for Exchange For Physical (EFP) transactions. The requirement to maintain internal records applies to all instructions received from clients, not just those instructions which are executed on the ASX Trade 24 platform.
AFS licensees who breach or are likely to breach specified provisions of the Corporations Act 2001 and the breach or likely breach is significant, have an obligation to report to ASIC under s912D of the Corporations Act 2001. The specified provisions include the provisions that require a participant to comply with the ASIC MIRs. So, breaches of ASIC MIRs are likely to be reportable under s912D. AFS licensees who are also Market Participants of ASX and, or ASX 24 should consider their reporting obligations under s912D when they become aware of breaches of the ASIC MIRs.
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
email@example.com, or through your relationship manager.
For more information
Please see www.asic.gov.au/market-supervision