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13-213MR ASIC makes rules on dark liquidity, high-frequency trading

Monday 12 August 2013

ASIC has released its market integrity rules on dark liquidity and high-frequency trading.

ASIC has also released guidance on the rules which clarifies ASIC’s expectations of market operators and participants.

‘The final rules follow extensive internal analysis and consultation with industry and will improve the transparency and integrity of crossing systems and strengthen the requirements for market participants to deter market manipulation,’ ASIC Commissioner Cathie Armour said.

‘We expect the new rules will quickly lead to changes in the behaviour of market participants, building on the positive changes we have already seen with other recent rule changes and the work of ASIC’s taskforces on dark liquidity and high frequency trading.

‘For example, there has been a significant decline in the volume of dark liquidity (below block size) as a result of the meaningful price improvement rule introduced in May this year, and we have observed a considerable drop in small and fleeting orders.’

Summary of rule changes

The rules will come into force in stages over nine months.

Dark liquidity

High frequency trading

ASIC will release guidance on automated trading and market manipulation in coming months.

Regulatory Guide 223 Guidance on ASIC market integrity for competition in exchange markets (RG 223)
Report 364 Response to submissions on CP 202 Dark liquidity and high-frequency trading: Proposals (REP 364)
ASIC Market Integrity Rules (Competition in Exchange Markets) Amendment 2013 (No. 2)
ASIC Market Integrity Rules (ASX 24 Market) Amendment 2013 (No. 2)
ASIC Market Integrity Rules (ASX Market) Amendment 2013 (No. 2)
ASIC Market Integrity Rules (Chi-X Market) Amendment 2013 (No. 1)

ASIC’s Market structure page has further information.

Editor's note:
On 21 August 2013 ASIC released an updated Regulatory Guide RG 241 Electronic trading (RG 241) which provides guidance on automated trading

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