ASIC Market Supervision Update Issue 61

End of financial year 'window dressing'

ASIC reminds market participants to be alert to unusual trading associated with the financial year end, which can impact share price valuations and end-of-financial-year performance figures. Often known as 'window dressing', it refers to orders placed at or near the close of trading, or on days leading up to the end of a reporting period, seeking to increase prices of a particular share.

Window dressing is a form of market manipulation and is generally conducted by parties who have an incentive to manipulate prices in or around reporting periods and benefit from this practice. These include investment managers, fund managers, MDA service providers and other portfolio managers, who report to clients in relation to investment performance on a periodic basis. As such, market participants should be alert to orders placed near the close on trading days leading up to reporting periods, that may impact the end of day price of securities.

ASIC's Market Surveillance team monitors trading of securities which increase in price near the end of reporting periods, which may be indicative of market manipulation. Previous surveillance activity has resulted in referrals to ASIC's Enforcement division for formal investigation. Participants should be aware of their obligations as gatekeepers, and should take active steps to identify possible misconduct, both by way of system controls and filters, as well as reviews of anomalous trading by designated trading representatives and compliance staff.

ASIC also reminds market participants of their obligation to report suspicious activity to ASIC under Rule 5.11 of the ASIC Market Integrity Rules (ASX Market) 2010 and the ASIC Market Integrity Rules (Chi-X Australia Market) 2011. Should ASIC uncover evidence of window dressing, our Enforcement team will investigate further, which may result in the imposition of ASIC market integrity rule or Corporations Act penalties.

For further information, market participants should refer to previous public statements made by ASIC and the ASX.

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 (MPS) team on 1300 029 454 and you will have these voice menu options:

  • Option 1 for real-time live market trading issues
  • Option 2 for other types of market trading issues or complaints
  • Option 3 for participant enquiries, notifications or exemptions.

Or you can reach the MPS team by email market.participants@asic.gov.au, or through your relationship manager.

If your issue relates to a trading or surveillance matter, please email markets@asic.gov.au.

For more information

Please see www.asic.gov.au/market-supervision.

Last updated: 30/03/2021 09:37