ASIC and OpenMarkets Australia Limited (OpenMarkets) have agreed for an independent expert to monitor, evaluate and report on OpenMarkets' implementation of recommendations arising from an independent review of its trading and compliance arrangements.

The independent expert completed their review of OpenMarkets’ trading and compliance arrangements in March 2017, in accordance with the licence conditions imposed on 12 December 2016 (see: 16-435MR). In the report, the consultant made recommendations for strengthening OpenMarkets' arrangements for

1. trade monitoring and surveillance
2. compliance measures, policies and procedures
3. the documentation and procedures for handling of client monies
4. record keeping and governance that facilitates improved supervision and monitoring of its arrangements, and
5. human and technological resources required to implement the recommendations and carry out supervisory arrangements.

To address the recommendations made, OpenMarkets is undertaking remedial action and has engaged the independent expert to carry out a review of the effectiveness of its implementation plan and actions. Under the updated licence conditions, the consultant will provide their final report in September 2017.

ASIC Commissioner Cathie Armour emphasised the importance of an adequate compliance and risk management framework.

'Market Participants offering direct market access to clients need to have robust pre-trade filter arrangements in order to protect the efficiency, fairness and integrity of our markets.  In addition, firms need to have adequate record keeping and human and technological resources to facilitate the implementation of such arrangements,' said Ms Armour.

ASIC acknowledges OpenMarkets' cooperative approach to improving its compliance standards and addressing ASIC's concerns.

Download

• MIntegrity's summary report and the additional licence conditions

Background

OpenMarkets is a Melbourne-based market participant trading on ASX, Chi-X, NSX and SIMVSE.  It is also an ASX Clearing and Settlement Participant. OpenMarkets trades in equities, exchange traded funds (ETFs), exchange traded options (ETOs) and warrants.

OpenMarkets is licensed to provide personal and general advice to both wholesale and retail clients.  

OpenMarkets offers AOP services to its clients. AOP enables orders to be registered in a market participant's system and then connected to a market automatically. This means client orders are directed to a market without being manually keyed in by a representative of the market participant.