"The government is committed to ensure that investors have choice and benefit from competition," Mr Shorten said in an official statement yesterday.
"In 2011, the government approved the commencement of Chi X as a new securities exchange in Australia and I am pleased that this has led to significant improvements in product offering and reduced fees."
Mr Shorten said he was aware that some investors had expressed concern about the use of high frequency trading and dark pools.
"The government is acting to ensure that investors have continued confidence in Australia's financial markets," he said.
"I believe that these new rules will help to reduce the risk of market volatility from high frequency trading and provide increased investor protection for retail investors and others trading in dark pools."
The rules were developed following extensive consultation by ASIC.
The package will provide for the direct control over trading algorithms, including kill switches and new extreme trading rules in case of large price movements.
New rules also include a requirement that dark pools offer meaningful price improvement over the lit market with exemptions for block trades and additional data reporting requirements to assist ASIC in performing market surveillance.
The market integrity rules would provide for an immediate obligation on the market operators - The Australian Securities Exchange and Chi X - to enforce an extreme trading range for trades in securities, in addition to new data reporting requirements on operations from 2013.
The obligations from the new rules would come into force for market participants over a six to 18 month period.
While the market integrity rules are a good start, stakeholders advised there were additional issues that needed to be considered and as a result ASIC has also launched two task forces focused on dark liquidity and high frequency trading. They are due to report to the Government in March 2013.
Mr Shorten further announced he has requested that Treasury conduct a review of Australia's financial market licensing regime.
While the review will examine the licensing of dark pools, it will also be directed at ensuring that the market licensing regime was generally "fit for purpose", he said.
Stakeholders will have an opportunity to provide their views as part of the review.
"I want to ensure that the licensing framework arrangements under the Corporations Act are appropriate so that ASIC has the best possible tools to supervise and regulate both the more traditional public exchanges and more recent developments," Mr Shorten said.
"The government also seeks a system that is adaptable as new markets and ways to trading develop. I welcome comments from all stakeholders."
The Financial Services Council (FSC) has backed the Government's new rules and applauded its measured approach as it strengthens the governance and oversight of high frequency trading and dark pools.
"We fully support these proposals which provide the flexibility for ASIC to monitor the market and introduce further controls at a later stage if necessary, FSC chief executive John Brogden said.
"The Government has got the balance right. A regulatory over-reaction would be just as damaging to the market as not introducing any new controls."
