ASIC sets new rules on suspicious trading Trevor Chappell AAP July 16, 2012 3:21PM
THE corporate watchdog says new rules governing the reporting of suspicious trading activity and other matters will bring the Australian share market into line with its overseas counterparts.
The Australian Securities and Investments Commission (ASIC) said on Monday that it had set new rules for suspicious activity reporting and short sale tagging requirements which will apply to the Australian Securities Exchange (ASX) and Chi-X markets.
From November 1, 2012, market participants will be required to notify ASIC when they become aware of certain suspicious trading activity.
The short sale tagging obligation starting from March 1, 2014, will require market participants to specify, at the time that an order is placed, the quantity of a sell order that is a short sale.
ASIC's senior executive leader of market and participant supervision, Greg Yanco, said the suspicious trading obligation would generate a greater number of reports of potential misconduct.
Also, reports would be received at an earlier stage, which would assist in earlier identification of potential misconduct.
"Experiences from regulators in comparable jurisdictions like the UK, Europe, Canada and the US suggest that supervision of insider trading and market manipulation is greatly enhanced by a robust suspicious activity reporting regime," Mr Yanco said.
The new requirements regarding short sale tagging were prompted by experience during the global financial crisis.
Short selling is where a person enters into an agreement to sell a security that the person does not currently own.
Short sellers need to make arrangements to cover their delivery obligations to the buyer before they fall due.
The most common reason for short selling is that an investor believes the security is overvalued and its price is likely to fall in the future.
Short selling the security will allow the investor to profit from the fall.
ASIC says the effective and timely disclosure of short selling can indicate the level of short selling in particular stocks, explain certain share price movements, and provides an early signal that individual securities may be overvalued.
It also indicates that a proportion of the sales in an individual security will need to be reversed by new purchases to cover the short seller's settlement obligations.
During the global financial crisis, uncertainty surrounding the actual level of short selling activity in Australian securities compounded the direct impact of short selling because it was resulting in rumour and speculation in the marketplace.
Talk about too little too late, and they have they HIDE to not enforce this immediately, have to wait till November 1st, another 15 weeks for the scum to rort the ar$e out of whats left...they say "From November 1, 2012, market participants will be required to notify ASIC when they become aware of certain suspicious trading activity." Well guess what, i've been a so called market participant for the last 10 years and then some, and i've reported "suspicious activity" hundreds of times, and all i get is the same letter word for word every single time.....
Thank you for your correspondence of 30 June 2012.
ASIC values the information we receive from the public, and reports of misconduct such as yours assist ASIC in working to build confidence in the integrity of the capital markets.
ASIC conducts an assessment of every report of misconduct we receive. The issues you have raised will receive careful consideration, and have been recorded on our internal intelligence database.
In determining which matters we will select for further action, consideration is given to the availability of evidence, and a range of factors, including the likely regulatory effect of any available action.
As ASIC is precluded from commenting on operational matters, we are unable to provide further details regarding what, if any, action we may or may not take in relation to the concerns you have raised.
If you require any information on our role as a market supervisor, or enforcement action taken by ASIC, please visit ASIC’s website at www.asic.gov.au.
Please note that ASIC will only contact you again in relation to your report of misconduct if we require further information or evidence to assist in our enquiries.
