The new competition market integrity rules are in line with the summary of the proposed market integrity rule framework ASIC released on 3 March 2011.
The package of documents published today consists of:
Competition
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Competition market integrity rules regulatory guide (RG 223)
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Feedback report to ASIC consultation paper 145 (CP 145) (REP 237)
Chi-X
A background paper including FAQ and summary of the package is attached.
ASIC Commissioner Shane Tregillis said, ‘This is a very significant milestone for Australian equity markets and gives effect to the Government’s policy to support competition between exchange markets in Australia. ASIC will continue to work with market operators and participants, including on industry testing issues, to promote a smooth transition for the introduction of competition in accordance with the timetable ASIC released in March this year.
‘ASIC will also consult further on broader market development, such as the need for additional market operator and participant risk controls and to complete the review of pre-trade transparency exceptions, in the third quarter of 2011. ASIC aims to settle these additional rules in early 2012, with sufficient time for transition and implementation,’ he said.
ASIC also notes that Treasury will be consulting on proposals for cost recovery and on possible legislative changes to the licensing of market operators in the coming months.
ASIC thanks the more than 40 organisations who provided feedback to CP 145.
Background
The competition market integrity rules set out the regulatory framework for competition in exchange markets. They are the result of extensive consultation with the industry and take into account the comments received on Consultation Paper 145 Australian equity market structure: Proposals (CP 145). They comprise the rules that ASIC considers necessary for the introduction of competition in Australia. The rules apply to trading on all competing equity markets (i.e. initially ASX and Chi-X). The bulk of these rules take effect on 31 October 2011.
A number of rules will take effect once the competition market integrity rules are formally registered as an instrument next week. This will enable the industry to prepare for competition. The rules include the provision of:
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pre-trade and post-trade information on reasonable commercial terms and on a non-discriminatory basis;
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other information required by market operators for regulatory purposes (e.g. on trading suspensions); and
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monthly reports to ASIC about crossing systems. These reports will assist our market analysis.
The new market integrity rules specifically for the Chi-X market are substantially similar to the relevant ASIC Market Integrity Rules (ASX Market) 2010, which were adapted from the long standing ASX operating rules, (now superseded). The Chi-X market integrity rules were set out in Consultation Paper 148 Proposed market integrity rules: Chi-X market (CP 148). The new rules will take effect once formally registered as an instrument next week.