ASIC Market Integrity Rules (Securities Markets) Determination 2018/206

Administered by Department of the Treasury

Legislation au F2018L00457 Not in force Legislative Instrument

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EXPLANATORY STATEMENT for
ASIC Market Integrity Rules (Securities Markets) Determination 2018/206

Prepared by the Australian Securities and Investments Commission

 

Corporations Act 2001

 

The Australian Securities and Investments Commission (ASIC) makes ASIC Market Integrity Rules (Securities Markets) Determination 2018/206 under subrule 6.2.1(4) of the ASIC Market Integrity Rules (Securities Markets) 2017 (the Rules).

Under subrule 6.2.1(4), ASIC may determine Tier 1 Equity Market Products and Tier 2 Equity Market Products in writing.

Under subrule 6.2.1(5), an instrument referred to in subrule (4) takes effect from 20 business days following the date the instrument is registered.

Capitalised terms in this Explanatory Statement refer to defined terms in the Rules.

 

  1.                                             Background

As part of its supervisory responsibilities, ASIC reviewed the 14 market integrity rule books in force in late 2016 and identified the need to consolidate certain market integrity rule books which covered substantively similar existing obligations across like domestic licensed markets.

Following public consultation, ASIC made the Rules in November 2017. Generally, the Rules maintain the substance of the regulatory regime embodied in market integrity rules (the Pre-Commencement Market Integrity Rules) applicable prior to the commencement of the Rules, including the ASIC Market Integrity Rules (Competition in Exchange Markets) 2011 (Competition Rules). The Rules will repeal the Pre-Commencement Market Integrity Rules on 7 May 2018.

Chapter 6 of the Rules sets out market integrity rules relating to pre-trade transparency of Orders and post-trade transparency of transactions executed on or reported to a Market, including in relation to Equity Market Products. A ‘Block Trade’ is a key concept in Chapter 6 and has the meaning given by subrule 6.2.1(1).

In order for a transaction to be a Block Trade, among other things, the consideration for the transaction may not be less than consideration thresholds set out in paragraph 6.2.1(1)(c) of the Rules, which differ according to whether the Relevant Product is a Tier 1 Equity Market Product, Tier 2 Equity Market Product, Tier 3 Equity Market Product or a CGS Depository Interest.

Under subrule 6.2.1(4) of the Rules, ASIC may determine Tier 1 Equity Market Products and Tier 2 Equity Market Products by instrument in writing.

Subrule 6.2.1(4) of the Rules is the successor to subrule 4.2.1(4) of the Competition Rules. Under subrule 4.2.1(4) of the Competition Rules, ASIC may give notice of Tier 1 Equity Market Products and Tier 2 Equity Market Products by publishing a notification on its website. ASIC most recently published such a notification on 12 March 2018 (the March 2018 notification): see http://asic.gov.au/regulatory-resources/markets/market-structure/block-trade-tiers/

In the instrument, the determinations of Tier 1 Equity Market Products and Tier 2 Equity Market Products under subrule 6.2.1(4) replicate the determinations in the March 2018 notification.

 

2.                                                Purpose of the instrument

The purpose of the instrument is to determine, for the purposes of paragraph 6.2.1(1)(c) of the Rules, the Tier 1 Equity Market Products and the Tier 2 Equity Market Products.

The instrument maintains the existing policy settings under the Competition Rules by replicating the determinations of Tier 1 Equity Market Products and the Tier 2 Equity Market Products in the March 2018 notification.

 

3.                                                Operation of the instrument

Name of legislative instrument

Section 1 provides that the instrument is the ASIC Market Integrity Rules (Securities Markets) Determination 2018/206.

Commencement

Section 2 of the instrument provides that the instrument commences on the day that is 20 business days after the instrument is registered on the Federal Register of Legislation.

Authority

Section 3 of the instrument provides that the instrument is made under subrule 6.2.1(4) of the ASIC Market Integrity Rules (Securities Markets) 2017.

Interpretation

Section 4(1) of the instrument provides that, unless the contrary intention appears, capitalised terms have the same meaning as in the Rules.

Subsection 4(2) of the instrument provides that ‘stock code’, in relation to an Equity Market Product, means the unique symbol assigned to the Equity Market Product under Rule 9.2.3 of the Rules and before 7 May 2018 includes the unique symbol assigned to the Equity Market Product under Rule 6.2.3 of the ASIC Market Integrity Rules (Competition in Exchange Markets) 2011.

Tier 1 Equity Market Products and Tier 2 Equity Market Products

Subsection 5(1) of the instrument provides that each Equity Market Product whose stock code is set out in the table in Schedule 1 to the instrument is a Tier 1 Equity Market Product.

Subsection 5(2) of the instrument provides that each Equity Market Product whose stock code is set out in the table in Schedule 2 to the instrument is a Tier 2 Equity Market Product.

Schedule 1

Schedule 1 provides that a specified Equity Market Product (referred to by its stock code) is a Tier 1 Equity Market Product.

Schedule 2

Schedule 2 provides that a specified Equity Market Product (referred to by its stock code) is a Tier 2 Equity Market Product.

 

4.                                                Consultation

There has been no consultation because the instrument is minor and machinery in nature.

A Regulatory Impact Statement is not required for this instrument as it maintains under the Rules the existing policy settings in force under the Competition Rules.

 


Statement of Compatibility with Human Rights

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

 

ASIC Market Integrity Rules (Securities Markets) Determination 2018/206

ASIC Market Integrity Rules (Securities Markets) Determination 2018/206 (the 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.

 

Overview

Chapter 6 of the ASIC Market Integrity Rules (Securities Markets) 2017 (the Rules) sets out market integrity rules relating to pre-trade transparency of Orders and post-trade transparency of transactions executed on or reported to a Market, including in relation to Equity Market Products. A ‘Block Trade’ is a key concept in Chapter 6 and has the meaning given by subrule 6.2.1(1).

In order for a transaction to be a Block Trade, among other things, the consideration for the transaction may not be less than consideration thresholds set out in paragraph 6.2.1(1)(c) of the Rules, which differ according to whether the Relevant Product is a Tier 1 Equity Market Product, Tier 2 Equity Market Product, Tier 3 Equity Market Product or a CGS Depository Interest.

Under subrule 6.2.1(4) of the Rules, ASIC may determine Tier 1 Equity Market Products and Tier 2 Equity Market Products by instrument in writing.

Subrule 6.2.1(4) of the Rules is the successor to subrule 4.2.1(4) of the ASIC Market Integrity Rules (Competition in Exchange Markets) 2011 (the Competition Rules). Under subrule 4.2.1(4) of the Competition Rules, ASIC may give notice of Tier 1 Equity Market Products and Tier 2 Equity Market Products by publishing a notification on its website. ASIC most recently published such a notification on 12 March 2018 (the March 2018 notification).

In this instrument, the determinations of Tier 1 Equity Market Products and Tier 2 Equity Market Products under subrule 6.2.1(4) replicate the determinations in the March 2018 notification.

 

Human rights implications

This legislative instrument does not engage any of the applicable rights or freedoms.

 

Conclusion

This legislative instrument is compatible with human rights as it does not raise any human rights issues.

 

Australian Securities and Investments Commission

Overview

The ASIC Market Integrity Rules (Securities Markets) Determination 2018/206 was enacted by the Australian Securities and Investments Commission (ASIC) under subrule 6.2.1(4) of the ASIC Market Integrity Rules (Securities Markets) 2017. This instrument was introduced to address the need for consolidation of market integrity rule books that covered similar existing obligations across domestic licensed markets. The determination replicates the determinations in the March 2018 notification, maintaining the existing policy settings under the ASIC Market Integrity Rules (Competition in Exchange Markets) 2011. The instrument, which comes into effect 20 business days after its registration, aims to define Tier 1 and Tier 2 Equity Market Products, ensuring that the consideration for Block Trades meets the specified thresholds. The ASIC Market Integrity Rules (Securities Markets) Determination 2018/206 maintains the existing market integrity framework by identifying specific Equity Market Products as either Tier 1 or Tier 2 products, thereby affecting their classification for transparency requirements. This legislative instrument ensures continuity in the application of market integrity rules and maintains the current regulatory regime. The instrument does not require consultation or a Regulatory Impact Statement as it maintains the status quo and does not introduce new policy settings. Additionally, it is compatible with human rights as it does not engage any of the applicable rights or freedoms.

Scope and Application

The ASIC Market Integrity Rules (Securities Markets) Determination 2018/206 applies to the Australian Securities and Investments Commission (ASIC) in its capacity as the market regulator under the Corporations Act 2001. This instrument, made under subrule 6.2.1(4) of the ASIC Market Integrity Rules (Securities Markets) 2017, specifically determines which Equity Market Products qualify as Tier 1 and Tier 2 products. These determinations are critical for setting the consideration thresholds that must be met for transactions to be classified as Block Trades under the Rules. The instrument replicates the determinations made in a previous notification published by ASIC on 12 March 2018, ensuring continuity in the regulatory framework. The instrument takes effect 20 business days after its registration on the Federal Register of Legislation. While the instrument itself does not explicitly mention any exclusions or exemptions, it is designed to maintain the existing policy settings, thereby adhering to the regulatory objectives of market integrity and transparency. Any further specifications or modifications to the scope of application would likely be made through subordinate instruments or regulatory notices issued by ASIC.

Key Provisions

The ASIC Market Integrity Rules (Securities Markets) Determination 2018/206 (the "instrument") is made under section 6.2.1(4) of the ASIC Market Integrity Rules (Securities Markets) 2017 (the "Rules"). The primary operative sections of the instrument are those that define the Tier 1 and Tier 2 Equity Market Products, which are listed in Schedules 1 and 2 respectively. These schedules detail the specific Equity Market Products that fall under each tier based on their stock codes, as defined in Rule 9.2.3 of the Rules. The instrument essentially replicates the determinations of Tier 1 and Tier 2 Equity Market Products previously communicated by ASIC in the March 2018 notification, thereby maintaining existing policy settings. The instrument imposes obligations on parties and entities by clearly delineating which Equity Market Products are classified as Tier 1 or Tier 2. This classification is crucial for compliance with the market integrity rules outlined in Chapter 6 of the Rules, particularly concerning the consideration thresholds for Block Trades as specified in subrule 6.2.1(1)(c). Market participants must ensure their transactions meet the respective thresholds for the tiers to which their products belong. Additionally, the instrument's commencement, as stipulated in Section 2, requires it to take effect 20 business days after its registration, thereby providing a clear timeline for when the new classifications will be legally enforceable. Breaches of the obligations imposed by the instrument may result in regulatory action, although the specific penalties are not detailed within the instrument itself. Generally, under the Corporations Act 2001, non-compliance with ASIC's rules can lead to enforcement actions, including fines and other penalties. For example, significant breaches may attract penalties of up to $1.65 million for corporations and $330,000 for individuals, as per the relevant provisions of the Corporations Act. Additionally, serious or repeated breaches might result in more severe consequences, such as disqualification from managing corporations or being banned from financial services activities. These potential penalties underscore the importance of adhering to the classifications and thresholds set forth in the instrument.

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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.