ASIC Response

I recently (again) contacted ASIC to point out a case that I could only conclude as price manipulation - at the time there were over 200 single share trades in GXY - and to ask why retail traders aren't allowed to conduct single share trades!
Their response just came through - what think you?



Thank you for your correspondence of 25 May 2016



In your correspondence, you raised concerns about possible manipulation of the GXY's share price through algorithmic trading. You also queried why retail traders are not allowed to trade single shares.

ASIC's role


ASIC is responsible for the administration and enforcement of the provisions of the Corporations Act 2001 and the ASIC Act 2001. Part of ASIC's role as a regulator is to ensure compliance with the legislation governing the provision of financial products and services. ASIC conducts an assessment of every report of misconduct we receive. In determining which matters we will select for further action, consideration is given to a range of factors, including the likely regulatory effect of any available action.

Algorithmic Trading


ASIC notes that your matter features trading practices commonly associated with algorithmic trading. On the basis of the information presently available and after making enquiries into the trading in GXY's securities, ASIC does not intend to take any action in relation to your concerns. ASIC can review this matter at any time in the future should we consider it appropriate, necessary or in the public interest to do so.

ASIC's position

ASIC is bound by the evidentiary requirements of the Courts. This means that in order to proceed with a criminal prosecution ASIC must ensure that all of the elements of the criminal offence can be proven.

ASIC has no tolerance for any form of market misconduct, irrespective of whether it originates from HFT, algorithmic program trading or other market participant trading strategies.


As the market regulator, ASIC is responsible for the supervision of market operators, market participants, financial markets and clearing and settlement facilities. While ASIC may advise the Australian Government on matters concerning the regulation of Australia's capital markets, it is not a law reform body.

As such, to the extent that you request (believe) that ASIC (should) enact legislative reforms in relation to algorithmic trading, we advise that this is a function carried out by the Australian Government and Treasury. For contacts details and further information regarding the functions of Treasury, please visit www.treasury.gov.au.
You may also wish to make a representation to your local member of parliament in relation to any suggested law reform.

You may be aware that on 12 August 2013 ASIC released market integrity rules on dark liquidity and high-frequency trading, following extensive internal analysis and consultation with industry. You may also be aware ASIC recently released both a report on HFT Report 331 'Dark liquidity and high frequency trading' and companion Consultation Paper 202 ' Dark liquidity and high frequency trading: Proposals' Outlining ASIC's findings toward both the interaction and effect of HFT and Dark liquidity on the Australian market and to propose further regulatory changes intended to build on the robust regulatory structure already in place. ASIC is aware that the trend to increased automation and associated trading activities has been occurring in the market for some years, and will continue in the advent of competition in the market place. The outcomes of CP168, CP184 and CP202 have proposed enhancements to ensure we maintain a strong and robust regulatory framework in that changing environment.

You can find more information about Report 331 and Consultation paper 202 at:

http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/rep331-published-18- March-2013.pdf/$file/rep331-published-18-March-2013.pdf

http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/cp202-published-18- March-2013.pdf/$file/cp202-published-18-March-2013.pdf

We thank you for taking the time to bring this matter to our attention. We have recorded the information you have provided in our confidential database.

Yours sincerely
Augustine Ochola
Misconduct & Breach Reporting Assessment &
Intelligence