The Australian Securities Exchange (ASX) and Chi-X have come out in support of the Australian Securities and Investments Commission (ASIC) directive to markets operators, limiting the number of trades they can execute until further notice.
This would require those market operators to reduce their number of trades by up to 25% from the levels last Friday, 13 March.
Dominic Stevens, ASX managing director and chief executive, said recent trading volumes on the ASX and Chi-X have been unprecedented, creating operational challenges for the industry.
“We recognise today’s action by ASIC is only the first step, and that more consideration needs to be given to a permanent solution,” Stevens said.
“The industry cannot provide unlimited capacity at short notice. Regulators, exchanges, participants and investors will need to come to a decision on what they want for the future.”
Stevens said the ASX would continue to collaborate with the industry and had also worked closely with other market operators and participants to help with their operational processes.
“ASX shares the regulator’s determination to maintain confidence in the integrity of Australia’s financial markets and we will continue to cooperate with ASIC, other market operators and market participants.”
Chi-X Australia said they would closely monitor the development and impact of COVID-19 on Australia’s financial markets and noted the exceptional recent volumes which culminated in the record trading levels on Friday, 13 March.
It was normally supportive of markets operating in an orderly and transparent manner without intervention, however, they supported prescriptive Australian Securities and Investments Commission (ASIC) measures announced.
“Chi-X is of the view that the measures are, for the time being, an appropriate response to the recent exceptional volumes and the potential issues they may raise across the Australian market,” a statement from the company said.
“It is important for all stakeholders to ensure the ongoing fair and orderly operation of Australia’s financial markets and Chi-X is grateful to ASIC and those participants involved for the assistance they have provided in achieving this goal.”
