ASIC Imposes Emergency Trading Rules Amid COVID-19
- High volumes have led to the regulator imposing a 25% reduction in market trades.
As the coronavirus continued to rattle financial markets across the world, Australian regulator, the Australian Securities and Investments Commission (ASIC) announced this Monday that it has taken steps to ensure the country's equity markets remain resilient.
Although Australia might seem far away, the country has not been immune to COVID-19, with the country reporting more cases almost every day. Over the past two weeks, its equity markets have seen record trading volumes, with Friday, the 13th of March seeing a particularly large spike in volumes.
In light of this, ASIC has issued directions under the ASIC Market Integrity Rules to a number of large equity market participants. Specifically, they have been told to limit the number of trades executed each day until further notice.
Under the watchdog's directions, firms need to reduce their number of executed trades by up to 25 percent from the levels executed on Friday. Therefore, high volume participants and their clients will need to actively manage their volumes.
"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," the agency said this Monday.
"If the number of trades executed continues to increase, it will put strain on the processing and Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term capabilities of market infrastructure and market participants."
Despite this, the Australian authority doesn't expect that these imposed limits will affect retail investors from being able to execute trades.
"Australian markets have been strong and resilient over this period, and this action is pre-emptive and intended to maintain those high standards," the statement from the regulator said.
ASIC remains proactive
As Finance Magnates reported, ASIC has been proactively reaching out to retail over the counter (OTC) derivatives issuers over the past couple of weeks, ensuring they are able to weather the coronavirus storm.
In particular, the Aussie watchdog urged firms to remain resilient, stressing the importance of having a number of measures in place to hedge against increased Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term, which is likely to result in higher than normal volume of trades.
As the coronavirus continued to rattle financial markets across the world, Australian regulator, the Australian Securities and Investments Commission (ASIC) announced this Monday that it has taken steps to ensure the country's equity markets remain resilient.
Although Australia might seem far away, the country has not been immune to COVID-19, with the country reporting more cases almost every day. Over the past two weeks, its equity markets have seen record trading volumes, with Friday, the 13th of March seeing a particularly large spike in volumes.
In light of this, ASIC has issued directions under the ASIC Market Integrity Rules to a number of large equity market participants. Specifically, they have been told to limit the number of trades executed each day until further notice.
Under the watchdog's directions, firms need to reduce their number of executed trades by up to 25 percent from the levels executed on Friday. Therefore, high volume participants and their clients will need to actively manage their volumes.
"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," the agency said this Monday.
"If the number of trades executed continues to increase, it will put strain on the processing and Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term capabilities of market infrastructure and market participants."
Despite this, the Australian authority doesn't expect that these imposed limits will affect retail investors from being able to execute trades.
"Australian markets have been strong and resilient over this period, and this action is pre-emptive and intended to maintain those high standards," the statement from the regulator said.
ASIC remains proactive
As Finance Magnates reported, ASIC has been proactively reaching out to retail over the counter (OTC) derivatives issuers over the past couple of weeks, ensuring they are able to weather the coronavirus storm.
In particular, the Aussie watchdog urged firms to remain resilient, stressing the importance of having a number of measures in place to hedge against increased Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term, which is likely to result in higher than normal volume of trades.