media release

05-364 ASIC reports on APX and Yieldbroker markets

Published

The Australian Securities and Investments (ASIC) today published its first assessment report about Australia Pacific Exchange Limited (APX).

It has also published its most recent assessment of Yieldbroker Pty Ltd.

The assessments are published as part of ASIC’s statutory requirement to conduct an assessment of how well licensed financial markets are complying with their obligations to supervise their markets.

APX

ASIC’s assessment of APX, whichhas operated a licensed financial market in securities since January 2005, considered whether APX has met all of its obligations as a market licensee, in addition to its obligation to supervise the market.

Taking into account the size of the APX market, ASIC has concluded that APX has adequate arrangements for the supervision of its market, in accordance with its obligations under the Corporations Act.

As a market licensee, APX must have arrangements to deal with any real or potential conflicts of interest between its commercial interests and its obligation to supervise its market. APX currently has arrangements in place that are subject to independent oversight.

ASIC has made some recommendations that are aimed at strengthening the existing conflict handling arrangements. In particular, ASIC has suggested that in light of APX’s ongoing relationship with the Austock Group, APX should review and more fully document its arrangements where necessary.

‘ASIC has concluded that APX is meeting its obligations, however, APX has acknowledged it has some issues to address as a result of the assessment process’, Ms Tracey Lyons, ASIC’s Director of Markets Regulation, said.

‘We will monitor APX to ensure that it makes the necessary improvements to continue to meet its obligations under the Corporations Act’, Ms Lyons added.

ASIC understands that APX will reduce its reliance on the resources of Austock Group as the market develops.

Further, APX has advised ASIC that it will put new arrangements in place that do not rely on paper-based transfer of title, due to some delays in settling trades on the market, arising from administrative inefficiencies.

Yieldbroker Pty Ltd

ASIC concluded that Yieldbroker, which operates a licensed financial market in corporate and semi-Government bonds, has adequate arrangements for the supervision of its market in accordance with its obligations under the Act.

The Yieldbroker and APX assessment reports are available from ASIC’s website at www.asic.gov.au.

Background

A financial market is defined as a facility through which offers to buy and sell financial products are regularly made. Anyone who operates a financial market in Australia must obtain a licence to do so, or otherwise be exempted by the Minister.

As part of the conditions of granting a licence to operate a financial market, the licensee must supervise the market in accordance with Part 7.2 of the Corporations Act.

Under the Corporations Act, ASIC is required to conduct an assessment of how well licensed financial markets are complying with their obligations to supervise their markets. ASIC must do this at least once per year in relation to each licensee. ASIC can also assess how well a licensee is complying with its other obligations under the Act.

End of release


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