ASIC Consults on Market Integrity Rules for the Chi-X Market

ASIC has released a consultation paper on March 4 proposing the application of new market integrity rules should Chi-X be granted a market licence.

Consultation Paper 148 Proposed Market Integrity Rules: Chi-X Market (Download PDF CP 148) proposes market integrity rules apply in relation to the Chi-X market only. The proposed rules are substantially similar to the current ASIC Market Integrity Rules (ASX Market) 2010, which were adopted from the long standing ASX operating rules.

The Consultation Paper explains ASIC’s approach to developing market integrity rules for the Chi-X market and sets out how we propose they would apply to market participants who also need to comply with the ASIC Market Integrity Rules (ASX Market) 2010.

Consultation on these rules is a necessary step in progressing Chi-X’s application. It will help ASIC advise the Minister for Financial Services and Superannuation on the final shape of potential market integrity rules for the Chi-X market.

Consultation on the proposed rules follows the Government’s announcement in March 2010 of support for competition in Australia’s financial markets and in principle approval of Chi-X’s market licence application.

The issue of CP 148 today was foreshadowed in the timetable issued yesterday by ASIC for the introduction of competition market service (refer to 11-38MR ASIC announces timetable for the introduction of market competition).

The proposed market integrity rules in CP 148 are separate from the intended new common market integrity rules for the introduction of market competition as summarised in Attachment 2 to 11-38MR. Those rules will apply to trading on all competing markets (i.e. initially ASX and Chi-X) and will address the new matters raised in ASIC’s Consultation Paper 145 Australian equity market structure (CP 145), necessary for a multi-market environment.

ASIC is seeking feedback on the market integrity rules proposals in CP 148 by 25 March 2011.

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