ASIC Market Integrity Rules (ASX Market) Amendment 2014 (No. 1)

Administered by Department of the Treasury

Legislation au F2014L00128 Rules Not in force Legislative Instrument

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ASIC MARKET INTEGRITY RULES (ASX MARKET) AMENDMENT 2014 (NO. 1)

EXPLANATORY STATEMENT

Prepared by the Australian Securities and Investments Commission

Corporations Act 2001

 

The Australian Securities and Investments Commission (ASIC) makes the ASIC Market Integrity Rules (ASX Market) Amendment 2014 (No. 1) (the Instrument) under subsection 798G(1) of the Corporations Act 2001 (the Corporations Act). Capitalised terms used in this Explanatory Statement (e.g. “Participant”) are defined in the ASIC Market Integrity Rules (ASX Market) 2010 (the ASIC Market Integrity Rules (ASX)).

  1. Enabling legislation

Subsection 798G(1) of the Corporations Act provides that ASIC may, by legislative instrument, make rules that deal with the following:

(a)   the activities or conduct of licensed markets;

(b)   the activities or conduct of persons in relation to licensed markets;

(c)   the activities or conduct of persons in relation to financial products traded on licensed markets.

The ASIC Market Integrity Rules (ASX) deal with the activities and conduct of the licensed market (the ASX Market) operated by ASX Limited (ACN 008 624 691) (ASX). 

2.     Background

On 12 July 2012, ASIC made the ASIC Market Integrity Rules (ASX Market) Amendment 2012 (No. 2). That instrument amended the ASIC Market Integrity Rules (ASX) by inserting a new Part 5.12.

Rule 5.12.1 requires a Market Participant of the ASX Market that short-sells section 1020B products (as defined in the Corporations Act) to specify the quantity of a sell order that is short at the time the sell order is placed or the quantity of an off-market trade that is short at the time the trade is reported (known as Short Sale Tagging).

 

Rule 5.12.2 of ASIC Market Integrity Rules (ASX) provided that an ASX Market Participant is not required to comply with the Short Sale Tagging obligation in Rule 5.12.1, until 10 March 2014 (the Compliance Start Date).

3.     Purpose of the legislative instrument

The purpose of the Instrument is to amend Rule 5.12.2 to extend the Compliance Start Date for the Short Sale Tagging obligation in Rule 5.12.1, to 28 July 2014. This change will give Market Participants and the Market Operator, ASX, more time to make the necessary system changes and also coincides with relevant enhancements to ASIC's market surveillance system.

 

Details of the Instrument are contained in Attachment A.

4.     Consultation

ASIC consulted at length on its proposal to introduce the Short Sale Tagging obligation through ASIC Consultation Paper 145 Australian equity market structure: Proposals (CP 145) released on 4 November 2010, and discussions with ASIC’s Market Supervision Advisory Panel, the Australian Financial Markets Association, the Stockbrokers Association of Australia, and Market Participants.

ASIC consulted on the proposal to extend the Compliance Start Date for the Short Sale Tagging obligation to 28 July 2014, through direct discussions with ASX, Chi-X and Market Participants. There was broad support for the change. Furthermore the change was made in response to Market Participants requesting an extension of time to implement the Short Sale Tagging obligations.

5.     Penalties

Subsection 798G(1) of the Corporations Act provides that market integrity rules are legislative instruments for the purposes of the Legislative Instruments Act 2003.

 

Subsection 798G(2) of the Corporations Act provides that market integrity rules may include a penalty amount for a rule. A penalty amount must not exceed $1,000,000. The penalty amount set out below a rule is the penalty amount for that rule. The Instrument does not affect the penalties payable in relation to any Rule.

6.     Commencement of the Instrument

 

The Instrument will commence in accordance with the commencement information in the Instrument, being the later of the day after the day on which the Instrument is registered under the Legislative Instruments Act 2003 and 9 February 2014. ASIC intends that the Instrument commence on 9 February 2014 to align with the existing commencement date for other changes to the ASIC Market Integrity Rules (ASX).

7.     Statement of Compatibility with Human Rights

 

A Statement of Compatibility with Human Rights is included in this Explanatory Statement at Attachment B.

7.    Regulation Impact Statement

 

The Short Sale Tagging obligation was the subject of Regulation Impact Statement: Short Sale Tagging in July 2012. The Regulation Impact Statement: Short Sale Tagging was lodged on the Federal Register of Legislative Instruments with the ASIC Market Integrity Rules (ASX Market) Amendment 2012 (No. 2). A further Regulation Impact Statement was not required for this Instrument as it is minor or machinery in nature and does not substantially alter the existing requirements for Market Participants.


ATTACHMENT A

Paragraph 1 – Enabling Legislation

This paragraph provides that the Instrument is made under subsection 798G(1) of the Corporations Act 2001.

Paragraph 2 – Title

This paragraph provides that the title of the Instrument is the ASIC Market Integrity Rules (ASX Market) Amendment 2014 (No. 1).

Paragraph 3 – Commencement

This paragraph provides that the Instrument commences on the later of the day after the day on which this instrument is registered under the Legislative Instruments Act 2003 and 9 February 2014.

Paragraph 4 – Amendments

This paragraph provides that Schedule 1 amends the ASIC Market Integrity Rules (ASX Market) 2010.

Schedule 1 - Amendments

Item [1] Rule 5.12.2

Item [1] of Schedule 1 to the Instrument replaces the date “10 March” in Rule 5.12.2 with the date “28 July”.


ATTACHMENT B

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

ASIC Market Integrity Rules (ASX Market) Amendment 2014 (No. 1)

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

  1. Overview of the Instrument
  1. The Legislative Instrument is made under subsection 798G(1) of the Corporations Act 2001 (Corporations Act) and amends the ASIC Market Integrity Rules (ASX Market) 2010 (ASIC Market Integrity Rules (ASX))  that apply to:

(a)   the activities and conduct of a financial market operated by ASX Limited (ACN 008 624 691) (ASX);

(b)   the activities or conduct of persons in relation to ASX; and

(c)   the activities or conduct of persons in relation to financial products traded on ASX.

2.      Rule 5.12.1 requires an ASX Market Participant that short-sells section 1020B products (as defined in the Corporations Act) to specify the quantity of a sell order that is short at the time the sell order is placed or the quantity of an off-market trade that is short at the time the trade is reported (known as Short Sale Tagging).

3.      The purpose of the Legislative Instrument is to amend ASIC Market Integrity Rules (ASX) by extending the compliance start date for Rule 5.12.1 from 10 March 2014 to 28 July 2014.

B.     Human rights implications

4.      The Legislative Instrument does not engage any of the applicable human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

C.     Conclusion

5.      The Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

D.     Consultation

6.      ASIC consulted at length on its proposal to introduce the Short Sale Tagging obligation through ASIC Consultation Paper 145 Australian equity market structure: Proposals (CP 145), released on 4 November 2010, and through discussions with ASIC’s Market Supervision Advisory Panel, the Australian Financial Markets Association, the Stockbrokers Association of Australia, and Market Participants.

7.      ASIC consulted on the proposal to extend the Compliance Start Date for the Short Sale Tagging obligation to 28 July 2014, through direct discussions with ASX, Chi-X and Market Participants. There was broad support for the change. Furthermore the change was made in response to Market Participants requesting an extension of time to implement the Short Sale Tagging obligations.

Australian Securities and Investments Commission

Overview

The ASIC Market Integrity Rules (ASX Market) Amendment 2014 (No. 1) was introduced by the Australian Securities and Investments Commission (ASIC) under subsection 798G(1) of the Corporations Act 2001. The primary purpose of this amendment is to adjust the compliance start date for the Short Sale Tagging obligation, extending it from 10 March 2014 to 28 July 2014. This extension was intended to provide market participants and the market operator, ASX, additional time to implement necessary system changes and to align with enhancements to ASIC's market surveillance system. The amendment was developed in response to feedback from market participants seeking more time to comply with the short sale tagging requirements, which were initially introduced in 2012. ASIC consulted extensively on the proposed changes, garnering broad support from industry stakeholders. The amendment does not alter the existing penalties or significantly change the regulatory requirements for market participants.

Scope and Application

The ASIC Market Integrity Rules (ASX Market) Amendment 2014 (No. 1) is a legislative instrument made by the Australian Securities and Investments Commission (ASIC) under the Corporations Act 2001. This instrument applies to the activities and conduct of the financial market operated by ASX Limited, as well as to the activities or conduct of persons in relation to ASX and financial products traded on ASX. The instrument amends the ASIC Market Integrity Rules (ASX Market) 2010 by extending the compliance start date for Rule 5.12.1 from 10 March 2014 to 28 July 2014. Rule 5.12.1 requires an ASX Market Participant that short-sells section 1020B products to specify the quantity of a sell order that is short at the time the sell order is placed or the quantity of an off-market trade that is short at the time the trade is reported (known as Short Sale Tagging). The extension was made in response to requests from Market Participants for more time to implement the Short Sale Tagging obligations, and there was broad support for the change. The instrument does not affect the penalties payable in relation to any Rule. ASIC consulted on its proposal to introduce the Short Sale Tagging obligation through ASIC Consultation Paper 145 Australian equity market structure: Proposals (CP 145) released on 4 November 2010, and discussions with ASIC’s Market Supervision Advisory Panel, the Australian Financial Markets Association, the Stockbrokers Association of Australia, and Market Participants. ASIC also consulted on the proposal to extend the Compliance Start Date for the Short Sale Tagging obligation to 28 July 2014, through direct discussions with ASX, Chi-X and Market Participants. The instrument does not engage any of the applicable human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. The instrument is compatible with human rights as it does not raise any human rights issues. The instrument will commence in accordance with the commencement information in the instrument, being the later of the day after the day on which the instrument is registered under the Legislative Instruments Act 2003 and 9 February 2014. ASIC intends that the instrument commence on 9 February 2014 to align with the existing commencement date for other changes to the ASIC Market Integrity Rules (ASX).

Key Provisions

The ASIC Market Integrity Rules (ASX Market) Amendment 2014 (No. 1) (Instrument) made under subsection 798G(1) of the Corporations Act 2001 (Corporations Act) amends the ASIC Market Integrity Rules (ASX Market) 2010 (ASIC Market Integrity Rules (ASX)). Specifically, the Instrument amends Rule 5.12.2 to extend the compliance start date for the Short Sale Tagging obligation from 10 March 2014 to 28 July 2014 (section 1, Schedule 1). This change aims to provide additional time for Market Participants and the Market Operator, ASX, to implement necessary system changes, as well as to align with enhancements to ASIC's market surveillance system. The Short Sale Tagging requirement, as stipulated in Rule 5.12.1, mandates that an ASX Market Participant who short-sells section 1020B products (as defined in the Corporations Act) must specify the quantity of a sell order that is short at the time the sell order is placed or the quantity of an off-market trade that is short at the time the trade is reported. The obligations imposed by the Instrument on the parties governed by the ASIC Market Integrity Rules (ASX) include the requirement for ASX Market Participants to specify the quantity of short sales as per Rule 5.12.1, but this obligation is now deferred until 28 July 2014 as per the amendment in Rule 5.12.2. This amendment is intended to facilitate smoother implementation of the Short Sale Tagging obligation and to ensure that the necessary technical and procedural adjustments are made without undue haste. ASX and Market Participants must ensure that their systems and processes are compliant with this obligation by the new compliance start date. The Instrument does not introduce new offences or alter the existing penalties for breaches of the ASIC Market Integrity Rules (ASX). According to subsection 798G(2) of the Corporations Act, any penalties for breaches of market integrity rules must not exceed $1,000,000. This means that any violations of the Short Sale Tagging obligation will still be subject to the penalties specified in the ASIC Market Integrity Rules (ASX), which could include significant financial penalties. Failure to comply with the amended compliance start date may result in enforcement actions by ASIC, potentially leading to legal and financial repercussions for the non-compliant Market Participants. The Instrument is set to commence on the later of the day after it is registered under the Legislative Instruments Act 2003 or 9 February 2014, ensuring a timely implementation aligned with other related changes to the ASIC Market Integrity Rules (ASX).

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.