ASIC today released a report outlining key operational statistics and outcomes of its market and participant supervisory functions for the reporting period 1 August to 31 December 2010 and markets-related deterrence outcomes from 1 January 2009 to 31 December 2010.
ASIC assumed responsibility for market supervision and real-time surveillance of trading from ASX on 1 August 2010. ASIC also supervises compliance with market integrity rules, compliance with the Corporations Act 2001 and ensures that Australian Financial Services Licence conditions are met by market participants.
During the first quarter of market surveillance at ASIC, there were 28,512 trading alerts, with 91 matters requiring further consideration. This is consistent with the number of alerts and referrals received by ASX in previous quarters. Seventeen matters were referred for investigation and just over half of those investigations commenced within 30 days of a matter having been identified. Two of these matters were referred from the ASX. The matters referred for investigation involved potential insider trading (10), market manipulation (one) and possible breaches of the Market Integrity Rules (four) and continuous disclosure obligations (two).
In addition to the 17 markets matters, a further four participant matters were identified during ASIC’s participant surveillance visits and referred for investigation - two of which relate to alleged unauthorised trading. Prevention of unauthorised trading and appropriate supervision of representatives are key themes addressed during our visits and ASIC expect participants to have appropriate controls and culture in place.
Matters concerning problematic algorithms have also been identified during our work with participants. ASIC is continuing to work with market participants and their clients to reduce the risk of algorithms having a negative impact on market integrity.
ASIC Commissioner, Shane Tregillis said, ‘The ASIC market surveillance unit has detected a number of potential market abuses. This number is similar to the number of matters previously detected by ASX. Our team is engaging with participants to amend order execution methods and review algorithmic trading issues. This role is essential in improving participant conduct and preventing potential misconduct and complements our deterrence role, which addresses more serious misconduct.’