ASX pays ASIC penalty for integrity infringement

The Australian Securities Exchange (ASX) has made history after being served a $1.05 million infringement notice by the Australian Securities & Investment Commission (ASIC).   

This is the first time ASIC, since its inception in 1991, has issued an infringement against a market operator. 

Despite the issue, the S&P/ASX 200 index today (8 March 2024) reports a high of 7,847 points.   

The ASX 200 accounts for 81% of Australia’s equity market as of September 2023. 

ASIC issued the notice as it has reasonable grounds to believe the ASX breached the rule requiring pre-trade transparency on 8,417 occasions between 4 April 2019 and 22 December 2022. 

The rule requires the ASX to make certain information about orders available on its trading system, however, it seems the ASX has failed to make that information available about orders for certain equity market products due to an incorrect system configuration. 

According to ASIC, the incorrect configuration went undetected until drawn to the ASX’s attention by a market participant, but on at least 2 occasions before 22 December 2022 the market operator could have, but did not, identify the issue. 

ASIC Chair Joe Longo says: “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.”

ASIC also found no evidence of other losses suffered as a result of the conduct. 

Longo says: “Technology and operational resilience for market operators is a strategic enforcement priority. ASIC will continue to take action to ensure that market operators and market participants have robust systems, controls and technological infrastructure in place to support Australia’s capital markets.”

However, once aware of the issue, the ASX took immediate steps to remedy the issue and notify ASIC. 

ASX Managing Director and CEO Helen Lofthouse says the market operator strives towards the highest standards, but is “very disappointed” this error occurred.

It must be noted this matter is separate to the ongoing ASIC investigation into oversight, statements, and disclosures around the CHESS replacement project, with which the ASX is cooperating fully. 

ASIC is an independent Australian government body set up under the Australian Securities and Investments Commission Act 2001. 

The ASX is an Australian public company which operates Australia’s primary securities exchange.

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Written By Adam Drought
Born and raised in the UK, Adam is a sports fanatic with an interest in Rugby League and UFC/MMA. When not training in Muay Thai and Brazilian Jiu Jitsu, Adam attends Griffith University where he is completing his final year of a Communication & Journalism degree.