ASIC hits ASX with $1.050m penalty

The Australian Securities Exchange (ASX) has been penalised to the tune of $1.050 million following an Australian Securities and Investments Commission (ASIC) investigation into its compliance with market integrity rules.

ASIC said it was the first time it has issued an infringement notice to a market operator.

ASIC said it issued the notice because ASIC has reasonable grounds to believe that ASX breached the rule requiring pre-trade transparency on 8,417 occasions between 4 April 2019 and 22 December 2022. The rule requires ASX to make certain information about orders available on its trading system. ASX failed to make that information available about orders for certain equity market products as a result of an incorrect system configuration.

Pre-Trade information is important because it assists with price formation, aids liquidity, enables investors to assess investment opportunities and value listed companies.

ASIC Chair Joe Longo said, “Confidence in Australia’s market operators is fundamental to fair and efficient markets. This action demonstrates that ASIC will hold market operators to the highest standards.”

This issue arose out of a failure by ASX to correctly configure certain order functionality on its trading system. ASIC considers ASX’s conduct was serious. The incorrect system configuration went undetected until drawn to ASX’s attention by a market participant.  On at least two occasions before 22 December 2022, ASX could have, but did not, identify the issue.