The Stockbrokers and Financial Advisers Association (SAFAA) has welcomed ASIC’s report on the November 2020 ASX market outage released on Thursday.
The corporate regulator confirmed it imposed additional licence conditions on three licences within the ASX Group, all directed at “mitigating risks for future upgrades”, following the outage which occurred on 16 November 2020 shortly after a major upgrade to ASX’s equity trading platform.
The conditions include a requirement of remediation on ASX’s Australian market licence regarding underlying issues with the 2020 outage and an independent expert appointed by ASIC to assess ASX Clear and ASX Settlement to assess whether ASX’s assurance program for the replacement of CHESS is fit for purpose.
“We are pleased that ASIC has recognised the need for ASX to refine its procedures for clear thresholds for moving out of an enquire session state during a market outage, review its communications protocol to market participants and other stakeholders and develop a protocol for intraday checkpoints that includes a final cut-off time after which the market will not reopen,” SAFAA CEO Judith Fox, said.
“The uncertainty around whether orders had been filled, either partially or fully with attendant challenges in managing client expectations, was a key impact on market participants during the outage.”
An independent review of the outage conducted by IBM Australia Limited in August found “several key shortcomings” in its system, noting “factors that suggested the ASX Trade system was not ready to go-live ... even though the formal implementation readiness processes were completed and verified by multiple parties without objection to go-live”.
Ms Fox continued: “The report points out that while Chi-X remained open for trading that day, it experienced very limited liquidity and trading activity as a result of the impact of the ASX outage.
“That impacted on the ability of market participants to submit new client orders to Chi-X.”
ASX did not oppose the additional licence conditions placed on it by ASIC on Thursday.
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