The Australian Securities and Investments Commission (ASIC) is looking to introduce new rules on pre-trade transparency and dark pools as part of the second stage of its reforms to the country’s market structure. Under the proposed rules, tier ‘block size’ exceptions, which currently stand at A$1m, could change.
Also being proposed are meaningful price improvement requirements for dark trades below block size (one tick or at midpoint), and a requirement that if dark liquidity below block size grows by 50% in three years, then a threshold would be imposed of AU$50,000 for dark trades arising from passive orders.
Trading venue competition is commencing from 31 October 2011 in Australia, with the introduction of new market integrity rules and the launch of new exchange Chi-X Australia. In the lead up, the regulator has been monitoring the development of market structure issues as the trend to increased automation and associated trading activities continues.
“ASIC’s priority is ensuring fair and efficient markets and we have been addressing issues arising from the automated trading environment since we assumed responsibility for market supervision in August 2010,” said ASIC deputy chairman Belinda Gibson.
Other rules under consideration in the new consultation document relate to automated trading, extreme price movements, enhanced data and trading surveillance and best execution.
“We have an efficient regulatory framework with controls in place to enable competition. The next step is to consider how emerging trading issues will impact our market over the coming years and enhance our framework accordingly. It is appropriate to address these issues in a multimarket environment, now competition is imminent. We are proposing a framework to maximise opportunities for innovation while maintaining market integrity,” she said.
ASIC will accept consultation on the proposals until 20 January 2012.