ASIC has today released a consultation paper proposing to consolidate and clarify Australia's market integrity rules.

There are currently 14 market integrity rule books that set out obligations and prohibitions applying to activities and conduct on eight licensed financial markets. Collectively, these rule books amount to more than 1,300 pages of regulation, and a further five regulatory guides set out guidance on ASIC's approach to regulating these markets.

In preparation for a detailed review of the market integrity rules, ASIC proposes to consolidate 13 of the 14 market integrity rule books into four, covering the:

• ASX, Chi-X, IR Plus, NSXA, and SSX securities markets, and competition between securities markets
• ASX 24 and FEX futures markets, and competition between futures markets
• capital requirements for ASX, Chi-X, SSX and NSXA securities markets, and
• capital requirements for ASX 24 and FEX futures markets.

Commissioner Cathie Armour said, ‘Consolidating the market integrity rules continues ASIC’s focus on reducing red tape and will create a single point of reference for market integrity rules that are common between like markets. It will also streamline the review and consideration of substantive amendments to the market integrity rules in the future.’

In consolidating the rules, ASIC also proposes to clarify existing obligations for:

• management requirements and responsible executives
• dealing 'as principal'
• block trades and large portfolio trades
• disclosures to wholesale clients about derivatives market contracts, and
• record-keeping requirements for market operators.

Submissions to CP 277 are due by 7 March 2017.

Download

• CP 277 and draft rules

Background

ASIC is responsible for supervising domestic licensed markets and making market integrity rules. ASIC assumed responsibility for market supervision and real-time surveillance of trading from ASX on 1 August 2010.

At present, there are six domestic licensed markets for securities, operated by:

1. ASX Limited (ASX)
2. Chi-X Australia Pty Limited (Chi-X)
3. IMB Limited (IMB)
4. IR Plus Securities Exchange Limited (IR Plus) (formerly SIM Venture Securities Exchange Limited (SIM VSE))
5. National Stock Exchange of Australia Limited (NSXA), and
6. Sydney Stock Exchange Limited (SSX) (formerly Asia Pacific Stock Exchange Limited (APX)).

In addition, there are two domestic licensed markets for futures products, operated by:

1. Australian Securities Exchange Limited (ASX 24) (formerly Sydney Futures Exchange Limited (SFE)), and
2. Financial & Energy Exchange Limited (FEX).

The market integrity rules for the IMB market are not included in the proposed consolidation of the market integrity rules because of the unique nature of that market (which offers trading solely in IMB securities) and the bespoke nature of those rules.

ASIC is committed to reducing red tape for market participants by administering the law efficiently with a minimum of procedural requirements. Our previous work in this area includes repealing a number of market integrity rules in May 2015 (refer: 15-097MR).