In a post earlier this year, I described how ASIC was considering consolidating the Market Integrity Rules. Following the growing number of market operators in Australia, it became apparent that the ASX could not be the sole market operator providing market supervision and real-time surveillance. As a result, ASIC drafted specific rules for each Market Operator.
ASIC has consolidated the regulations into securities markets and futures markets. In this way, the ASIC Market Integrity Rules (Securities Markets) 2017 (“the Securities Markets Rules”) has been drafted to incorporate the activities and conduct on the following securities exchanges - ASX, Chi-X, NSXA, SSX and IR Plus. The Securities Markets Rules also incorporate the regulations governing competition between markets.
Similarly, the ASIC Market Integrity Rules (Futures Markets) 2017 (“the Futures Markets Rules”) refer to the ASX 24 (formerly, the Sydney Futures Exchange) and the FEX futures markets.
The rules governing capital and reporting requirements continue to remain separate - the ASIC Market Integrity Rules (Securities Markets – Capital) 2017 (“the Securities Capital Rules”) and the the ASIC Market Integrity Rules (Futures Markets – Capital) 2017.
By reducing the number of separate regulations, the consolidation process will ultimately:
- Reduce red tape.
- Reduce compliance costs and resources.
- Create a single point of reference.
- Ensure commonality between the market operators and the products that are listed on those markets.
- Assist ASIC’s role in supervising the markets and facilitating ongoing market amendments.
ASIC also used the opportunity to clarify certain matters which already existed in the current Market Integrity Rules, namely:
- Management requirements and Responsible Executives (the latter being an ASX only requirement).
- Dealing as principal.
- Block trades and large portfolio trades.
- Record keeping requirements for Market Operators.
ASIC has stipulated a 6 month transition period, such that the effective commencement date for the new Market Integrity Rules will be Monday 7 May 2018. In the intervening time period, ASIC will need to reissue class and individual rule waivers; and update the relevant Regulatory Guides.
Although there are six domestic securities market operators, the Securities Markets Rules have not included the IMB market, due to the fact that this market only offers trading in IMB Limited securities and the current Market Integrity Rules are reflective of this unique attribute.
ASIC has announced certaining additional transitioning for three of the market operators:
NSXA
- For those Participants who use their systems for automated order processing, they must comply with the Securities Capital Rules and Parts 5.5, 5.6 and 5.7 of the Securities Markets Rules from 4 December 2017.
- NSXA and its participants must comply with the Securities Markets Rules from 5 November 2018.
- All Participants must comply with the Securities Capital Rules from 6 May 2019.
NSXA, IR Plus, SSX
ASIC has granted a three year transitional to these three market operators and their Participants from the Competition of Exchange Markets rules.
Should you have any queries about ASIC or other issues involving the CSF regime, compliance, licensing, or corporate governance, please contact Jeremy Danon, director of Ariel & Associates Pty Ltd on (02) 8223 3355 or at jeremy@ariel.associates.