media release

05-202 ASIC releases annual ASX assessment

Published

Mr Jeffrey Lucy, Chairman of the Australian Securities and Investments Commission (ASIC), today released the findings of ASIC's most recent assessment of the Australian Stock Exchange (ASX).

'ASIC's assessment shows that the ASX continues to function as an effective and reliable market. We are also very pleased that the ASX has made significant progress in responding to the recommendations in our last report', Mr Lucy said.

Under the Corporations Act, ASIC must conduct an annual assessment of how well the ASX is complying with its obligations to supervise its market. This is the third assessment ASIC has undertaken.

ASIC's report to the Government concludes that the ASX has adequate arrangements for supervising the market, including arrangements for:

  • handling conflicts between its commercial interests and the obligation to operate the market in a fair, orderly and transparent way
  • monitoring the conduct of participants, and
  • enforcing compliance with its rules.

The ASX has taken a number of positive steps since the release of ASIC's last report in September 2004, including:

  • the establishment of arrangements for supervisory and compliance personnel to elevate issues of concern to the Audit and Risk Committee of the ASX Board; and
  • the establishment of an internal compliance function.

Further, ASIC believes that the ASX Corporate Governance Guidelines, which became fully effective during 2004, will have a positive impact on disclosure practices and the behaviour of market participants.

The ASX has agreed to review its practices in relation to some areas of concern identified by ASIC. These practices have been raised by ASIC in previous assessments, and include aspects of supervision of the warrants market, and consistency in monitoring and enforcing the disclosure provisions of the listing rules.

'We are aware that the ASX is reviewing its supervisory structure and the process will involve consultation with ASIC', Mr Lucy said.

'The ASX plays a crucial and important role in the oversight of Australia's financial markets, and remains committed to working with ASIC in promoting high standards of market behaviour and creating investor confidence', Mr Lucy said.

The assessment report is available on ASIC's website at www.asic.gov.au.

Background

A financial market is defined as a facility through which offers to buy and sell financial products are regularly made. Anyone who operates a financial market in Australia must obtain a licence to do so, or otherwise be exempted by the Minister.

As part of the conditions of a granting a licence to operate a financial market, the licensee must supervise the market in accordance with Part 7.2 of the Corporations Act.

Under the Corporations Act, ASIC is required to assess whether a licensee has adequate arrangements to supervise its market. ASIC must do this at least once per year in relation to each licensee.

Media enquiries: Contact ASIC Media Unit