ASIC today released its annual assessment report of the ASX Group (ASX) licensees.

The assessment covers 1 November 2011 to 30 June 2012

[1] and pays attention to how ASX dealt with a number of specific issues, including:

• the sufficiency of ASX’s technological resources, in particular following the outage to its market announcements platform on 9 October 2012 [2]

• its approach to dealing with long-term suspended entities, and

• its processes for reviewing prospectuses.

The report sets out a number of areas the ASX has agreed to address, working closely with ASIC. While important, these issues did not cause ASIC to qualify the conclusion that ASX adequately met its obligations for the assessment period.

The agreed actions from this report deal with:

• Technology – While ASIC was satisfied with ASX’s operational response to the market announcements platform outage, we question the approach it took to keeping all market users adequately informed. ASX has agreed to review its communication procedures, including the timing of future communications about system issues to market participants and other market users, with a view to providing the information in an appropriate timely manner.

• Monitoring and enforcing compliance – ASX will make a number of changes including exploring improvements to its processes for monitoring its listing rules (false market) and providing increased transparency to the market about its monitoring of long-term suspended entities. It will also change its processes for reviewing prospectuses, including by formulating more extensive procedures to guide the timing and extent of its reviews, and taking a broader approach to reviewing the information in prospectuses and improving its record keeping.

Download

• Report 345 Market assessment report: ASX Group (REP 345)

Background

ASX comprises two market licensees and four licensed clearing and settlement facilities - ASX Limited, ASX Clear Pty Limited (formerly known as Australian Clearing House Pty Limited), ASX Settlement Pty Limited (formerly known as ASX Settlement and Transfer Corporation Pty Limited), Australian Securities Exchange Limited (formerly known as Sydney Futures Exchange Limited), ASX Clear (Futures) Pty Limited (formerly known as SFE Clearing Corporation Pty Limited) and Austraclear Limited.

A financial market is defined as a facility through which offers to buy and sell financial products are regularly made. A clearing and settlement facility is defined as a facility that provides a regular mechanism for the parties to transactions relating to financial products to meet obligations to each other that arise from entering into transactions. Anyone who operates a financial market or clearing and settlement facility in Australia must obtain a licence to do so, or otherwise be exempted by the Minister.

ASIC is required to annually assess a financial market and clearing and settlement facility licensee’s compliance with its obligations under the Corporations Act 2001.

Notes

Note 1.While our assessments generally cover the financial year, this year’s assessment begins on 1 November 2011, as our previous assessment was extended to capture the ASX market outage on 27 October 2011.

Note 2. Significant post financial year end events are also reviewed.