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11-266AD ASIC releases ASX assessment report
The reporting period commences from 1 July 2009 and covers a number of events that have occurred recently, including ASX’s technological incidents up to August 2011. The assessment was used to broadly understand the operational changes that ASX has made as a result of the transfer of market supervision to ASIC on 1 August 2010.
The report sets out a number of areas for attention that ASX has agreed to address, working closely with ASIC. In some cases, ASX has already initiated steps to meet the agreed actions. While important, these issues did not cause ASIC to qualify the conclusion that ASX adequately met its obligations during the reporting period.
The agreed actions from this report deal with:
Technology – ASIC had concerns with the deployment of ASX’s technological resources during the period of review. The agreed actions are designed to better ensure that the release and management of ASX technology projects are done in a way that limits undue disruption to market users. They focus on ASX’s engagement with ASIC and market participants about major and minor technical changes, improvements to ASX communications with industry and its approach to determining participant readiness.
Compliance with operating rules – ASIC reviewed ASX’s ongoing obligations to monitor and enforce compliance with its operating rules. The agreed actions relate to improvements in ASX’s approach to discussing and recording continuous disclosure matters with issuers and its processes around futures contract monitoring.
Performance indicators – ASIC reviewed current performance measures and agreed with ASX that a new set of measures needs to be developed that take account of ASX’s changed role in the frontline supervision of trading.
The reporting period commences on 1 July 2009 to align ASIC’s assessment and ASX’s self-assessment periods. Previously the ASX reporting period was for the financial year and the ASIC assessment period covered calendar years.
While the report focuses on ASX’s deployment of technological resources, it does not cover the ASX market outage on 27 October 2011. ASIC completed its review before the market outage. It will be included in the next assessment along with a more detailed review of how the changes ASX has made as a result of the transfer of market supervision are now operating in practice. The next assessment is underway.
ASX comprises two market licensees and four licensed clearing and settlement facilities - ASX Limited, ASX Clear Pty Limited (formerly known as Australian Clearing House Pty Limited), ASX Settlement Pty Limited (formerly known as ASX Settlement and Transfer Corporation Pty Limited), Australian Securities Exchange Limited (formerly known as Sydney Futures Exchange Limited), ASX Clear (Futures) Pty Limited (formerly known as SFE Clearing Corporation Pty Limited) and Austraclear Limited.
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.
Under the law at the time of the assessment, the licensee of a financial market was required to supervise and operate their market in accordance with Part 7.2 of the Corporations Act 2001 and ASIC was required to conduct an assessment of those obligations. ASIC must do an assessment at least once per year in relation to each licensee.