ASXMS Publishes Its 2009 Report

The Australian Securities Exchange Markets Supervision (ASXMS) office – mandated to supervise futures, equities, clearing and settlement at the Australian Securities Exchange (ASX) – published its 2009 annual report this week. Here are some highlights.

The ASXMS made 88 “referrals” and 60 “notifications” to the Australian Securities and Investments Commission (ASIC). The referrals included 20 suspected continuous disclosure breaches, 14 suspected market manipulation breaches and 31 suspected insider trading breaches. ASXMS received 42 finalization letters from ASIC.

The ASXMS held meetings with senior management of 14 major institutions and 22 market participants.The major issues raised included capital adequacy increases, third-party clearing, T+5 settlement close-out, the value of increased supervisory visibility and activity of both ASXMS and ASIC; and ‘fat finger’ trading errors.

The ASXMS began to review corporate governance disclosure that included annual reports. This was the first review of compliance against the revised ASX Corporate Governance Principles and Recommendations.

The new Issuers Activity Solution (IAS) was implemented on schedule. The IAS delivers a web-based application that allows the collection of Issuers activity and data nationally replacing the manual Compliance Activities Log.

ASXMS developed and implemented a series of risk-based compliance measures in response to changes in short selling, the reporting of short sales, the reporting of securities lending and borrowing, trading in partly-paid securities, as well as to the T+3 settlement arrangements.

The Enforcement unit finalized 34 matters with 51 matters outstanding and the Enforcement unit lodged 25 matters with the Disciplinary Tribunal.

The successful integration of the ASX/SFE disciplinary process has received six issues from the Futures Supervision unit and finalized one of those matters.

Breaches relating to settlement greater than T+3 dominated disciplinary. Participants are required to commence closing-out positions at T+5 and by no later than T+10.

There was a significant increase in the complexity and seriousness of matters involving allegations of market manipulation, unprofessional conduct and short selling. Total fines levied were increased from $175,000 to $235,000. The Disciplinary Tribunal fined Tricom Equities Limited $1.35 million plus GST; the highest possible fine.

A total of 3,915 queries were raised with listed entities, of which 1,492 were queries relating to continuous disclosure. There were 1,647 announcements made following a query, 55 of which were made after a trading halt. Of these announcements, 835 were a result of Listing Rule 3.1 monitoring activity. There were 89 suspensions by ASXMS due to a breach of the Listings Rules.

New listing activity declined markedly with only 45 equity and debt listings compared to 236 last year. However, secondary market raisings were exceptionally strong boasting a record $AUD88 billion. This ranked the ASX third globally behind the New York and London Stock Exchanges in the six months to June 2009.

The Issuers unit found directors’ interest notices were filed late 6.4% of the time Q1 2009 and 7.3% in Q3.

0.8% of all active trades by directors during the Black Out Period of Q3 2009 contravened the trading policies of the entities concerned, compared to 1.1% in Q1 2009 and 0.3% in Q3 2008.

The full report can be found here.

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