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ASIC introduces new market integrity rules

3 minute read

The new rules aim to promote technological and operational resilience.

ASIC has announced a series of new market integrity rules aimed at promoting the resilience of market operators and participants.

The corporate regulator said that its new technological and operational resilience rules clarify and strengthen the existing obligations for securities and futures market operators.

“Our changes will ensure that our market integrity rules remain appropriate as our markets have become increasingly digitised and automated,” said ASIC commissioner Cathie Armour.

The new rules, which followed consultation with market stakeholders, will apply from 10 March next year and relate to a number of areas.

These include change management, outsourcing, information security, business continuity planning, governing and resourcing and trading controls for market operators.

“Australia’s markets and its participants are facing increased technological and operational risks. As we have seen in the past, such as with the November 2020 ASX outage, failures in these areas can have significant real-world consequences,” said Ms Armour.

“Our new rules set minimum expectations and controls to mitigate these risks and help to safeguard the integrity and resilience of Australia’s markets.”

ASIC said that the new rules would also provide greater domestic and international alignment.

Meanwhile, the corporate regulator said it had also made amendments to the existing prohibition on payment for order flow to address regulatory gaps.

From 10 June this year, the rules will cover when a market participant sells client order flow and payment for order flow that occurs among other market intermediaries.

“These amendments are a proactive measure to avoid the emergence of payment for order flow arrangements in Australia,” ASIC said.

In addition, “deregulatory, minor and administrative changes” have been made to 10 ASIC-made rule books in order to reduce regulatory burden on participants alongside general updates and refinement.

These include a new “good fame and character” test for market operators and participants in securities and futures markets which will come into effect from 10 June.

ASIC has also repealed the retail client adviser accreditation regime and amended the rules covering trade confirmations for non-retail clients and regulatory data reporting under the securities markets rules.

New suspicious activity reporting obligations have been introduced for futures markets which will apply from 10 June.

The requirement for client authorisations to be in writing for block trade and exchange for physical orders as part of the futures markets rules has also been removed.

“In making all of the above amendments, ASIC considered feedback from market stakeholders, developments in the market and the approaches of other domestic and international regulators,” the regulator said.

Jon Bragg

Jon Bragg

Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.