ASIC tells large equity market participants to limit number of trades executed each day

Maria Nikolova

These firms will have to reduce their number of executed trades by up to 25% from the levels executed on Friday.

The Australian Securities & Investments Commission (ASIC) today announced measures to ensure Australian equity markets remain resilient. The measures form part of the Australian Government’s response to the novel coronavirus (COVID-19).

The regulator notes that the Australian equity markets have seen record trading volumes in the last couple of weeks. ASIC explains that Australian markets have been strong and resilient over this period, and the measures it outlines are pre-emptive.

In addition to increasing volumes, Australia’s equity markets have seen exponential increases in the number of trades executed, with a particularly large increase in trades last Friday, March 13, 2020. While there was no disruption to market operations on Friday, there was a significant backlog of work required to be undertaken over the weekend by the exchanges and trading participants. If the number of trades executed continues to increase, it will put strain on the processing and risk management capabilities of market infrastructure and market participants, the regulator warns.

Given this, ASIC has issued directions under the ASIC Market Integrity Rules to a number of large equity market participants, requiring those participants to limit the number of trades executed each day until further notice.

These firms will have to reduce their number of executed trades by up to 25% from the levels executed on Friday. This action will require high volume participants and their clients to actively manage their volumes.

ASIC does not expect these limits to impact the ability of retail consumers to execute trades.

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