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12-61MR Attachment - Key messages from feedback to CP 168
General comments – There was widespread consensus that current economic conditions ought to be taken into account by ASIC in settling the proposals. There were mixed views on the appropriate time to implement some of the reform proposals.
Automated and algorithmic trading – There were differences of opinion about whether rules need to be made on this topic now. Many respondents said the existing rule framework is adequate for issues arising because of its emphasis on participant responsibility for trading messages submitted to the market. Many respondents suggested ASIC publish guidance to clarify its expectations of conduct under the existing rules, rather than make new rules.
Extreme price movements – There was limited comment on ASIC’s proposed volatility controls, but the comments received suggested building on existing rules (specifically the rules about anomalous order thresholds (AOT) and extreme cancellation ranges (ECR)) as opposed to making new rules. There was support for a volatility control for the ASX SPI 200 index futures contrac.
Enhanced data for surveillance – Industry stakeholders recognise ASIC’s need for additional data to support its surveillance function. However, practical and technical implementation issues, including cost, were raised.
Best execution – Respondents suggested that expansion of the scope of best execution to apply to products that are not traded on both ASX and Chi-X is not needed now.
Pre-trade transparency (dark liquidity) – Industry stakeholders recognised ASIC’s concerns about pre-trade transparency and price formation. There were widely divergent views on the extent of the problem, and the appropriate response – especially from exchanges and operators of crossing systems (dark pools).
