ASIC acts on market integrity breaches
Public concerns about high frequency trading (HFT) appear to have been over-stated and are probably attributable to increased use of trading technology generally, according to an Australian Securities and Investments Commission (ASIC) report on the impact of dark liquidity and HFT.
However ASIC said the work by two internal taskforces had found potential breaches of Market Integrity Rules and the Corporations Act, and these matters were being investigated.
The report and a consultation paper released today revealed that two internal ASIC taskforces had not found any systematic manipulation or abuse of markets by high frequency traders, but found that their trading strategies were commonly adopted by many other algorithmic traders, including institutions.
Commenting on the findings, ASIC deputy chairman Belinda Gibson said many of the issues raised could be dealt with by existing regulations and that there had been a marked change in the professional traders' behaviour during the course of the regulator's study.
That study found that HFT in Australia was dominated by a small group of trading entities, with the 20 largest entities accounting for about 80 per cent of all HFT turnover representing 22 per cent of total equity market turnover.
On the question of dark liquidity, the taskforce found that while the volume of dark trading was remaining around 25 to 30 per cent, the composition of dark liquidity and market participant-operated dark venues had changed significantly.
It said there were now 20 crossing systems operated by 16 market participants and they had started to connect to one another.
Recommended for you
The new financial year has got off to a strong start in adviser gains, helped by new entrants, after heavy losses sustained in June.
Michael McCorry, chief investment officer at BlackRock Australia, has detailed how investors are reconsidering their 60/40 portfolios as macro uncertainty highlight the benefits of liquid alternatives.
Having reset its market focus to high-net-worth advisers, Praemium’s administration solution has been selected by Bell Potter in a deal that increases the platform's funds under administration by $6 billion.
High transition rates from financial advisers have helped Netwealth’s funds under administration rise by $3.7 billion in the fourth quarter of FY25.
