Perhaps the market is lifted by this announcement?
DJ UPDATE: ASX Boosts Penalty For Market Abuses To A$1M26/03/2008 02:10PM AEST (Adds comment from ASX CEO, background.)
By Susan Murdoch and Rebecca Thurlow Of DOW JONES NEWSWIRES
MELBOURNE (Dow Jones)--Australia's stock and futures exchange operator, ASX Ltd. (ASX.AU), Wednesday said it will increase the maximum penalty on market abuses to A$1 million from A$250,000. The ASX has been under pressure in recent months to tighten trading regulations, following concern that predatory hedge funds and short-selling practices are increasing volatility in the market.ASX Chief Executive Robert Elstone told a Perth conference there are lessons from the global fallout from the U.S. subprime mortgage market crisis for all stakeholders in Australia's financial economy, including the regulators.
"There are lessons...for regulators like ASX and the Australian Securities and Investments Commission in ensuring that existing regulations are enforced, but at the same time, avoiding heavy-handed regulatory responses that could make our markets less efficient and, hence, less internationally competitive," Elstone said in an address to the ASX and ASIC Seminar for Listed Companies.
In a statement, the ASX said new disciplinary processes and an appeals rule book become effective from March 31.
It said a new breach notice process will be introduced to streamline minor disciplinary issues and apply a fixed penalty of A$2,000 for all such matters. The maximum penalty limit for the most serious market abuses, such as market manipulation, increases to A$1 million.
The new rule book creates a single guide for all disciplinary and appeal processes; and establishes a disciplinary tribunal, integrating the ASX, Australian Clearing House, and ASX Settlement and Transfer Corporation tribunals with the existing SFE Business Conduct and Market Practices Committees.
Earlier this month, corporate regulator the Australian Securities and Investments Commission said it had launched an investigation following concerns that some companies had been hit by false rumors and predatory trading by hedge funds.
ASIC said it had made formal requests for information from a number of market participants about trading in certain securities over previous weeks, and was seeking help on any role by international players from the Securities and Exchange Commission in the U.S., the Financial Services Authority in the U.K. and Hong Kong's Securities and Futures Commission.
The government has also said it is looking into possible legislative changes to address the issues.
The move followed sharp falls in the share prices of a number of listed companies, particularly childcare group ABC Learning Centres Ltd. and fund manager Allco Finance Group Ltd., amid speculation heavy selling in the stocks was exacerbated by short-sellers driving down the share prices.
In early March, the ASX warned that if it identifies the making or spreading of false rumors, especially in conjunction with short selling, it will refer the matter to the Australian Securities and Investments Commission for further investigation.
Calls from industry participants about tighter regulation have also shone a spotlight on the ASX's dual role as a listed enterprise and market regulator.
The government is currently assessing whether to open up the ASX's trading monopoly to competitors. This could potentially result in the ASX losing its supervisory role, due to the potential conflicts of interest that may arise in supervising its competitors.
-By Susan Murdoch and Rebecca Thurlow, Dow Jones Newswires; 61-3-9671-4393; [email protected]
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