The Australian Securities and Investments Commission (ASIC) has released a consultation on proposed updates to its market integrity rules (MIRs) for trading systems and automated trading. The reforms are designed to reflect technological advances, including the increasing use of artificial intelligence (AI), while streamlining requirements across securities and futures markets. The changes aim to align Australian regulations with international best practice and principles set by the International Organisation of Securities Commissions.
ASIC noted that algorithmic trading dominates activity in domestic markets, comprising around 85% of equities trading, 94% of SPI 200 futures trading and 46% of three-year Treasury bond futures trading. With automated systems now central to trading, order management and surveillance, ASIC emphasised the importance of safeguards to mitigate risks, particularly during periods of market volatility.
Under the proposals, participants would be required to strengthen development, testing, monitoring and control of trading algorithms, including the introduction of ‘kill switches’ to suspend problematic activity. ASIC also plans to repeal outdated rules and reduce regulatory complexity, including removing the requirement for annual notifications on automated order processing. A conditional class no-action position will be provided for securities participants in respect of notifications due from November 2025.
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