Australian regulator to launch wider investigation into ASX market outage

ASIC will launch a wider investigation in 2017 into ASX's risk management procedures.

Australia’s markets regulator will launch a deeper investigation into the market outage on ASX’s equities exchange which occurred in September.

The Australian Securities and Investments Commission (ASIC) released an initial report on the outage, in which a hardware malfunction had stopped equities trading for most of 19 September.

ASIC stated: “A general lack of confidence on the day resulted in trading drying up, with very little liquidity shifting to Chi-X’s competing market. A key benefit of market competition is the availability of an alternative market when ASX is unavailable.”

ASIC recommended a number of initial steps ASX should adopt to prevent another failure, including reviewing its operational risk arrangements and reviewing its communication strategy.

It also called on market participants to review their arrangements for dealing with market outages, and reviewing their own system-preparedness for managing such outages.

ASIC said it would launch a wider review in 2017 of the operational and technological risk management procedures at the exchange.

Days after the outage, newly appointed CEO Dominic Stevens said the outage was “unacceptable to the market and unacceptable to ASX.”