The FINANCIAL — The Australian Securities Exchange (ASX) acknowledges the release on September 28 of the Australian Securities and Investments Commission’s (ASIC) annual assessment of compliance by the ASX group with its statutory
obligations.
The assessment covers the activities of all six ASX group licensees for calendar year 2008.
For the seventh consecutive year since the legislative introduction of these assessments, ASIC has concluded that ASX:
• Has adequate arrangements in place to supervise its markets and its clearing and settlement facilities; and
• Is adequately managing conflicts between its commercial interests and the need to ensure fair, orderly and
transparent markets, and fair and effective clearing and settlement facilities.
The report contains nine agreed actions that ASX put in place prior to or during the assessment process as part of its own program of ongoing improvement. These actions were in areas such as participant monitoring and issuer admissions. ASX will report to ASIC on the effectiveness of its changes over the next several months.
The report also contains four recommendations derived from issues that emerged during the turbulence of 2008.
These are consistent with challenges faced by exchanges and regulators in markets around the world, and include the supervisory consequences of algorithmic trading and the listing and trading of partly paid securities.
ASX has begun to address the recommendations and will report to ASIC on each within the agreed timeframe.
ASIC’s assessment follows the Reserve Bank of Australia’s annual assessment of ASX’s licensed clearing and settlement (CS) facilities, published 22 September, which found that all four CS facilities operated by ASX complied with the relevant Financial Stability Standards and did all other things necessary to reduce systemic risk in the year to end-June 2009.
Also today, ASX has published its ASX Group Activities in FY09 report that highlights notable market events
and ASX operational, supervisory and technological activities for the period 1 July 2008 to 30 June 2009.
This is the first time ASX has published a report covering the activities of its market operator and clearing and settlement facility licensee subsidiaries for a broad market audience. It complements the more shareholderfocused Annual Report of ASX Limited released on 20 August 2009 and extends beyond the timeframe covered by the ASIC assessment.
Given the turbulence in global financial markets throughout FY09, ASX believes its Group Activities report should support market confidence and promote a better understanding of the role performed by ASX.
The report details the comprehensive operational framework ASX had in place throughout FY09 comprising:
• Efficient and effective supervisory services via ASX Markets Supervision;
• Sound and transparent processes to operate the market with well-defined controls;
• Robust and reliable technological infrastructure;
• Comprehensive risk control and exposure monitoring measures;
• Effective conflict handling arrangements; and
• Experienced and skilled staff in supervision, operations and risk management.
The report also highlights areas of future focus for ASX including:
• Developing new products and core systems capabilities;
• Reviewing the impact on the market of algorithmic trading;
• Strengthening the risk protections of its clearing counterparties; and
• Responding to changes in financial markets regulation.
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