ASIC Market Integrity Rules (Chi-X Australia Market) Amendment 2014 (No. 1)

Administered by Department of the Treasury

Legislation au F2014L00129 Rules Not in force Legislative Instrument

Legislation content

ASIC MARKET INTEGRITY RULES (CHI-X AUSTRALIA 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 (Chi-X Australia 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 (Chi-X Australia Market) 2011 (the ASIC Market Integrity Rules (Chi-X)).

  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 (Chi-X) deal with the activities and conduct of the licensed market (the Chi-X Market) operated by Chi-X Australia Pty Ltd (ACN 129 584 667) (Chi-X).

2.     Background

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

 

Rule 5.12.1 requires a Market Participant of the Chi-X 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 (Chi-X) provided that a Chi-X 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, Chi-X, 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 (Chi-X).

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 (Chi-X Australia 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 (Chi-X Australia 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 (Chi-X Australia Market) 2011.

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 (Chi-X Australia 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 (Chi-X Australia Market) 2011 (ASIC Market Integrity Rules (Chi-X))  that apply to:

(a)   the activities and conduct of a financial market operated by Chi-X Australia Pty Ltd (ACN 129 584 667) (Chi-X);

(b)   the activities or conduct of persons in relation to Chi-X;

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

2.      Rule 5.12.1 requires a Chi-X 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 (Chi-X) 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 (Chi-X Australia Market) Amendment 2014 (No. 1) was enacted by the Australian Securities and Investments Commission (ASIC) under the authority of the Corporations Act 2001. This legislative instrument aims to address a specific gap by extending the compliance start date for the Short Sale Tagging obligation in Rule 5.12.1 of the ASIC Market Integrity Rules (Chi-X). Initially set for 10 March 2014, the amendment shifts the compliance date to 28 July 2014, thereby providing additional time for market participants and Chi-X to implement necessary system changes. This adjustment aligns with enhancements to ASIC's market surveillance system and responds to requests from market participants for more time to comply with the Short Sale Tagging requirements. The policy objective behind this amendment is to ensure a smoother transition for market participants and to enhance the effectiveness of ASIC's market surveillance capabilities.

Scope and Application

The ASIC Market Integrity Rules (Chi-X Australia Market) Amendment 2014 (No. 1) applies to the activities and conduct of Chi-X Australia Pty Ltd, a financial market operator, as well as to the activities or conduct of persons in relation to the Chi-X Market and the financial products traded on it. This legislative instrument is made under subsection 798G(1) of the Corporations Act 2001, which empowers the Australian Securities and Investments Commission (ASIC) to create rules governing licensed markets, the conduct of participants, and financial products traded on those markets. Specifically, the Amendment extends the compliance start date for the Short Sale Tagging obligation, originally set for 10 March 2014, to 28 July 2014. This extension provides additional time for market participants to implement necessary system changes and aligns with enhancements to ASIC's market surveillance system. The Amendment does not alter existing penalties or introduce new ones, maintaining the maximum penalty amount of $1,000,000 as stipulated in the Corporations Act. The Instrument is set to commence on the later of the day after registration under the Legislative Instruments Act 2003 or 9 February 2014, with ASIC intending the commencement date to be 9 February 2014.

Key Provisions

The ASIC Market Integrity Rules (Chi-X Australia Market) Amendment 2014 (No. 1) primarily amends the ASIC Market Integrity Rules (Chi-X) to extend the compliance start date for the Short Sale Tagging obligation in Rule 5.12.1 from 10 March 2014 to 28 July 2014. Rule 5.12.1 requires Chi-X Market Participants who engage in short-selling of section 1020B products to specify the quantity of a sell order that is short at the time it is placed or the quantity of an off-market trade that is short at the time the trade is reported. This extension is intended to provide Market Participants and Chi-X with additional time to implement the necessary system changes and to align with enhancements to ASIC's market surveillance system. The Act imposes specific obligations on the Chi-X Market Participants and Chi-X Australia Pty Ltd. Market Participants who engage in short-selling of section 1020B products must now comply with the Short Sale Tagging obligation by 28 July 2014, specifying the quantity of short sell orders or off-market trades. Chi-X, as the Market Operator, must ensure that its systems and processes are updated to facilitate compliance with this obligation. Both Market Participants and Chi-X are required to adhere to these amended rules to maintain integrity and transparency within the Chi-X Market. There are no explicit new penalties introduced by this legislative instrument, as it does not alter the penalties already stipulated in the ASIC Market Integrity Rules (Chi-X). However, non-compliance with the amended Short Sale Tagging requirement could lead to enforcement actions by ASIC, which may include fines or other sanctions under the Corporations Act. The maximum penalty for a breach of market integrity rules is $1,000,000, as specified in subsection 798G(2) of the Corporations Act. This underscores the importance of timely compliance with the amended rules to avoid potential legal and financial repercussions. The instrument is set to commence on the later of the day after the day on which it is registered under the Legislative Instruments Act 2003 and 9 February 2014. ASIC intends the instrument to commence on 9 February 2014 to align with the existing commencement date for other changes to the ASIC Market Integrity Rules (Chi-X). This ensures that the regulatory changes are implemented smoothly and without unnecessary delays. Additionally, the Legislative Instrument is accompanied by a Statement of Compatibility with Human Rights, affirming that the changes do not engage any of the applicable human rights and freedoms recognised or declared in international instruments.

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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.