The integrity rules create new obligations on different operators in the dark pool space and build on the regulator’s tier trading rules introduced in May.
“The final rules follow extensive internal analysis and consultation with industry and will improve the transparency and integrity of crossing systems and strengthen the requirements for market participants to deter market manipulation,” ASIC commissioner Cathie Armour said.
“There has been a significant decline in the volume of dark liquidity (below block size) as a result of the meaningful price improvement rule introduced in May this year, and we have observed a considerable drop in small and fleeting orders,” she added.
The rulings require new disclosure and confidential requirements for trading participants, a duty to report any suspicious activity directly to ASIC, a standardised ticker size that does not discriminate against participants, and new regulations on the commission structure.
The obligations will be introduced over the next nine months.
“We expect the new rules will quickly lead to changes in the behaviour of market participants, building on the positive changes we have already seen with other recent rule changes and the work of ASIC’s taskforces on dark liquidity and high frequency trading,” Ms Armour stated.
ASIC has also introduced new rules on high frequency trading, which involves sophisticated technological tools and computer algorithms used to execute the rapid trading of securities.
These rules, which will be clarified in the coming months, include new methods to identify and prevent manipulative trading, and harmonisation regulations for market participants.
