ASIC To Supervise Australian Markets

by Mary Swire, LawAndTax-News.com, Hong Kong

15 July 2010

The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen, has announced that the transfer of supervisory responsibility for Australia's domestic licensed financial markets will take place on August 1, 2010.

In August last year, the government decided that the Australian Securities and Investments Commission (ASIC) should take over the supervision of real-time trading on all of Australia's domestic licensed markets. The present arrangements require individual financial markets to self-supervise their trading, but the new reform, it was said, would be in line with the move towards centralised or independent regulation in other leading jurisdictions.

ASIC will now be responsible for both supervision and the enforcement of the laws against misconduct by broker participants which take place on a licensed Australian financial market, while individual markets – such as the Australian Securities Exchange (ASX) - will retain responsibility for supervising the entities listed on them.

"I have previously said that I would only provide for the transfer of supervision to take place once I was completely satisfied that all the necessary preparations have been made," Chris Bowen said. "I am pleased to say I have spoken with industry bodies and market participants and they have expressed to me their broad support for ASIC's readiness to take on the new role on August 1."

"ASIC has worked closely with the industry to prepare for this significant change,” he added. It is a direct result of these efforts, and particularly ASIC's close engagement with the ASX and key stakeholders, that Australia's financial market is well-prepared for this handover of responsibility. I would also like to thank the ASX for its co-operation with ASIC, which will help ensure that this technically complex transfer occurs as smoothly as possible."

ASIC’s Chairman,Tony D’Aloisio said: “ASIC is ready to assume this important responsibility. We have an integrated market surveillance system in place and we have developed a streamlined markets analysis methodology and relationship management model. We have built and trained a quality Market & Participant Supervision team, which will be complemented by ASX surveillance staff that will transfer to ASIC on August 1, 2010.”

“We are currently engaging with market participants via a roadshow and through their industry associations to assure them that while the responsibility for supervising the rules is changing, their existing obligations will not change at this time. The market integrity rules are generally the same as those which exist currently and we intend to approach our supervision in a way which is consistent with the current approach.”

Chris Bowen also announced his intention to consent to ASIC's market integrity rules and to the consequential changes to the operating rules of the ASX Group. The Minister's in-principle consent to the ASIC market integrity rules will provide certainty to the market as to the rules which will govern it from August 1.

Formal approval will be granted once the Corporations Amendment (Financial Market Supervision) Act 2010 commences on that date. The Federal Executive Council also formalised the legislation which provides details of the proposed fee structure that ASIC will charge to recover the costs of supervision.

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