Published On: Sun, May 26th, 2013

ASIC Pre-trade Transparency Exceptions to Come Into Effect

Greg Medcraft ASIC chairman

Greg Medcraft ASIC chairman

ASIC would like to remind market participants that new market integrity rules relating to pre-trade transparency exceptions come into effect on 26 May 2013. Rule 4.2.1 of ASIC Market Integrity Rules (Competition in Exchange Markets) was revised to introduce tiered thresholds for block trading, while the meaningful price improvement exception to pre-trade transparency replaces the ‘at or within the spread’ exception under Rule 4.2.3.

The revised Rule (Competition) 4.2.1 allows for a transaction to be executed without pre-trade transparency where the consideration for the transaction is not less than $1 million or more for Tier 1 products; $500,000 or more for Tier 2 products; and $200,000 or more for Tier 3 products.

The revised Rule 4.2.3 (Competition) requires below block trades executed without pre-trade transparency to offer meaningful price improvement. To meet the meaningful price improvement rule, the trade must be at a price that is:
• higher than the Best Available Bid and lower than the Best Available Offer for the Relevant Product by one or more Price Steps (ticks); or
• at the midpoint of the best available bid and best available offer (where midpoint = (best available bid + best available offer) ÷ 2).

The best available bid and best available offer are the highest pre-trade transparent bid and lowest pre-trade transparent offer available across all pre-trade transparent order books of licensed markets (also known as the national best bid and offer, or NBBO).
Participants should refer to Regulatory Guide 223 Guidance on ASIC market integrity rules for competition in exchange markets (RG 223) for guidance on complying with the new rules.

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