ASIC has released the findings of its third assessment of the Sydney Futures Exchange (SFE).
Under the Corporations Act 2001, ASIC is required to conduct an annual assessment of how well the SFE is complying with its obligations to supervise the market.
ASIC has concluded that the SFE 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 report identifies some suggested improvements to SFE’s supervision and compliance arrangements to ensure it can continue to comply with its obligations in the future, including:
- formalisation of agreements between SFE and its swap and bond dealers who provide settlement prices;
- a review of record keeping practices in relation to disciplinary decisions made by the Business Conduct Committee and the Market Practices Committee; and
- the continued monitoring resources available for SFE’s supervisory functions.
‘The SFE is already acting on the recommendations in the report. We welcome their collaborative approach to ensuring that investors and participants can have confidence in Australia's derivatives exchange market,’ ASIC’s Director of Markets Regulation, Ms Tracey Lyons, said.
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 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 conduct an assessment of how well licensed financial markets are complying with their obligations to supervise their markets. ASIC must do this at least once per year in relation to each licensee. ASIC can also assess how well a licensee is complying with its other obligations under the Act.