Power to supervise markets handed to ASIC

The power to supervise domestic Australian market licensees will be handed over to the Australian Securities and Investments Commission (ASIC) today.

Reforms to the supervision of Australia’s financial markets will be facilitated through the introduction of legislation into Parliament today, aimed at enhancing the integrity of Australia’s financial markets.

“The decision to transfer responsibility for supervision of Australia’s financial markets to ASIC is a significant one which will stand the operation of Australian financial markets in good stead into the future,” said Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen.

The three key measures of the Bill include: removing the obligation on Australian market licensees to supervise their markets; providing ASIC with the function of supervising domestic Australian market licensees; and providing ASIC with additional powers.

These additional ASIC powers include the ability to make rules with respect to trading in markets and to enforce those rules.

Public consultation resulted in changes to the Bill, and as a consequence the maximum penalty for a breach of a market integrity rule for either an individual or a corporation has been reduced to $1 million. The maximum pecuniary penalty payable when entering into an arrangement with ASIC to avoid civil proceedings has been lowered from four-fifths of the maximum a court can order to three-fifths of the maximum a court can order.

“Setting the maximum penalty level at $1 million is an appropriate level because it is equivalent to the maximum that the ASX [Australian Securities Exchange] can currently fine a market participant for a breach of an ASX rule,” said Bowen.

“In addition, the discount rate for avoiding civil proceedings has been lowered to provide a real incentive to enter into an arrangement with ASIC to avoid civil proceedings,” he added.