ASIC Consultation Paper 145 – Proposals for Australian Equity Market Structure

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The Australian Securities & Investments Commission (ASIC) has recently released Consultation Paper 145 (CP145) “Australian Equity Market Structure” and associated Report 215. The release of CP 145 is regarded by ASIC as a response to changes in equity markets globally. ASIC has proposed a number of new market integrity rules which it considers are necessary to keep pace with technological developments and global financial market trends. ASIC’s proposals are also intended to enhance the government’s new confirmed policy for competition in financial markets.

In CP 145, ASIC says that its priorities in relation to the changes in global equity markets are to build confidence in the integrity of Australia’s capital markets, protect retail investors, and facilitate international capital flows.

CP 145 examines proposals such as:

• new controls to curb extreme price movements and to require transparent cancellation arrangements – a response to the 6 May ‘flash crash’ in the US;
• enhanced controls for direct electronic access and algorithmic trading – in response to the increasingly pervasive role of technology;
• placing formal obligations on market participants to deliver “best execution” to clients;
• minimum disclosure about order and trade information – to promote efficient price formation on markets and reduce incentives for trading to shift to ‘dark pools’ (a term which describes the trading volume created by institutional orders that are unavailable to the public);
• consolidation of market data across all execution venues – to ensure whole of market transparency;
• market operator cooperation on trading halts and related matters; and
• better regulatory data on orders and trades – to ensure ASIC’s market supervision keeps pace with market developments.

Comments in response to CP 145 are due by 21 January 2011. ASIC proposes to issue a new regulatory guide and market integrity rules as soon as reasonably practicable in 2011.

To view the consultation paper, click here.

Contact Details

Philip Vickery
Partner
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Michael Linehan
Partner
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David Walker
Partner
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Darren Pereira
Partner
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