Govt moves on dark pools
The financial services industry has generally welcomed the Federal Government's announcement of market integrity rules covering high frequency trading and dark pools.
At the same time, the Government has instructed the Treasury to conduct a review of Australia's financial market licensing regime to ensure it is "fit for purpose".
The package of measures has been announced by the Minister for Financial Services, Bill Shorten, who said it included the use of "kill switches" and algorithmic trading.
He said the new rules provided for direct control over trading algorithms including kill switches to immediately stop an algorithm if required, new extreme trading rules in cases of large price movement, a requirement that dark pool offer meaningful price improvement over the "lit" market, with exemptions for block trades and additional data reporting requirements to assist the Australian Securities and Investments Commission (ASIC).
Shorten said the new rules would provide for an immediate obligation on the market operators to enforce an extreme trading range for trades in securities.
The Financial Services Council has today supported the Government's market integrity rules dealing with high frequency trading and dark pools.
Commenting on the changes, Financial Services Council chief executive John Brogden said the Government had adopted a measured approach which would strengthen the governance and oversight of high frequency trading and dark pools.
"We fully support these proposals which provide the flexibility for ASIC to monitor the market and introduce further controls at a later stage if necessary," Brogden said.
"The Government has got the balance right. A regulatory over-reaction would be just as damaging to the market as not introducing any new controls."
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