ASIC Market Supervision Update Issue 8

Other issues


Levels 1 and 2 Accredited Derivatives Advisers

Shortly ASIC will announce the renewal date for the purposes of Market Integrity Rule 2.4.9(2)(b), 2.4.14(2) and 2.4.20(5)(b).

In accordance with the Market Integrity Rule 2.4.13, market participants may apply to renew the accreditation of its advisers within the 60 day renewal period preceding the renewal date. At the renewal date, accreditation of any adviser whose market participant has not applied for re-accreditation will lapse.

It is our intention not to require advisers to undergo an examination as part of the renewal process. We do, however, remind participants of their obligations under section 912A(1)(e) and (f) of the Corporations Act 2001 to ensure all representatives are adequately trained and competent. Chapter F of Regulatory Guide 146 details ASIC's expectations in relation to ongoing training of advisers.

We will contact participants directly with further details of the renewal process.

 

Exchange traded funds

ASIC is concerned about the large number of aberrant trades in Exchange Traded Funds (ETFs). In the three months to February 2011 nearly 50% of all ETFs experienced price spikes with some ETFs experiencing several. It seems these trades usually occur as the first trade of the day, in most cases before the ETF market makers are obliged to provide markets. ASIC is concerned that participants may not be adequately safe guarding the interests of investors in these products. Participants are urged to examine the use of filters for ETFs and make DTRs aware of the issue.

 

Financial services obligations

Along with responsibility for market supervision ASIC maintains a strong focus on AFSL obligations, particularly with respect to Chapter 7 of the Corporations Act 2001. We are engaging with market participants and indirect market participants around the adequacy of risk management & compliance frameworks via traditional and targeted surveillance work.

We continue to see serious breaches involving unauthorised trading by representatives and we wish to remind all AFSL holders of their obligations to have ongoing robust supervision and monitoring of representative dealings with clients. The consequences of breaches in this area can have significant ramifications for both the individual and the AFSL holder. Where serious breaches are identified, ASIC will take all appropriate measures.

Another issue concerns orders placed on behalf of retail clients by a third party such as a newsletter issuer. In these cases the participant should carefully review the instructions and ensure there is the appropriate authorisation. Without specific client authorisation or a discretionary account (meeting Corporations Act requirements) such a trade could amount to unauthorised trading.

 

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.

Last updated: 30/03/2021 09:35