ASIC beefs up market integrity requirements
Participants in the Australian Securities Exchange and Chi-X markets will be required to report any suspicious reporting activity under new market integrity rules.
The reporting rules are set out in the Australian Securities and Investments Commission's (ASIC's) Regulatory Guide 238 'Suspicious activity reporting' (RG238) and Information Sheet 158 'Short sale tagging' (INFO158).
The RG238 rules have a stated commencement date of 1 November 2012, but the regulator stated that it will waive the obligation to comply with the rule until 20 January 2013.
According to Greg Yanco, ASIC's senior executive leader of market and participant supervision, the new requirements will see an increase in the number of useful reports by market participants of potential misconduct.
"ASIC also expects that these reports may be received at an earlier stage than currently, which will, in turn, facilitate early identification by ASIC of possible misconduct," he said.
Taking affect from 1 March 2014, the short sale tagging obligation will require market participants to specify the amount of a sell order that is a short sale at the time an order is placed.
"For on order book transactions, this will require specification of the number of products that are short at the time the order is placed into the market," ASIC's statement read.
Reporting for off order book transactions will require participants to specify the number of products that are short in the trade report provided to a market operator, the regulator added.
Yanco said the rules bring the Australian market in line with international best practice and will be manageable by the industry due to the long lead time being provided.
"Experiences from regulators in comparable jurisdictions like the UK, Europe, Canada and the US suggest that supervision of insider trading and market manipulation is greatly enhanced by a robust suspicious activity reporting regime," he said.
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