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.
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 can be successful in both low and high volatile environments, but the strategies employed are often different depending upon volatility. Why Too Much Volatility is a ProblemIn the FX space, lower volatile currency pairs offer less surprises, and are suited to position traders.High volatile pairs are attractive for many day traders, due to quick and strong movements, offering the potential for higher profits, although the risk associated with such volatile pairs are many. Overall, a look at previous volatility tells us how likely price will fluctuate in the future, although it has nothing to do with direction.All a trader can gather from this is the understanding that the probability of a volatile pair to increase or decrease an X amount in a Y period of time, is more than the probability of a non-volatile pair. Another important factor is, volatility can and does change over time, and there can be periods when even highly volatile instruments show signs of flatness, with price not really making headway in either direction. Too little volatility is just as problematic for markets as too much, we uncertainty in excess can create panic and problems of liquidity. This was evident during Black Swan events or other crisis that have historically roiled currency and equity markets. 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 can be successful in both low and high volatile environments, but the strategies employed are often different depending upon volatility. Why Too Much Volatility is a ProblemIn the FX space, lower volatile currency pairs offer less surprises, and are suited to position traders.High volatile pairs are attractive for many day traders, due to quick and strong movements, offering the potential for higher profits, although the risk associated with such volatile pairs are many. Overall, a look at previous volatility tells us how likely price will fluctuate in the future, although it has nothing to do with direction.All a trader can gather from this is the understanding that the probability of a volatile pair to increase or decrease an X amount in a Y period of time, is more than the probability of a non-volatile pair. Another important factor is, volatility can and does change over time, and there can be periods when even highly volatile instruments show signs of flatness, with price not really making headway in either direction. Too little volatility is just as problematic for markets as too much, we uncertainty in excess can create panic and problems of liquidity. This was evident during Black Swan events or other crisis that have historically roiled currency and equity markets. 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.
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 can be successful in both low and high volatile environments, but the strategies employed are often different depending upon volatility. Why Too Much Volatility is a ProblemIn the FX space, lower volatile currency pairs offer less surprises, and are suited to position traders.High volatile pairs are attractive for many day traders, due to quick and strong movements, offering the potential for higher profits, although the risk associated with such volatile pairs are many. Overall, a look at previous volatility tells us how likely price will fluctuate in the future, although it has nothing to do with direction.All a trader can gather from this is the understanding that the probability of a volatile pair to increase or decrease an X amount in a Y period of time, is more than the probability of a non-volatile pair. Another important factor is, volatility can and does change over time, and there can be periods when even highly volatile instruments show signs of flatness, with price not really making headway in either direction. Too little volatility is just as problematic for markets as too much, we uncertainty in excess can create panic and problems of liquidity. This was evident during Black Swan events or other crisis that have historically roiled currency and equity markets. 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 can be successful in both low and high volatile environments, but the strategies employed are often different depending upon volatility. Why Too Much Volatility is a ProblemIn the FX space, lower volatile currency pairs offer less surprises, and are suited to position traders.High volatile pairs are attractive for many day traders, due to quick and strong movements, offering the potential for higher profits, although the risk associated with such volatile pairs are many. Overall, a look at previous volatility tells us how likely price will fluctuate in the future, although it has nothing to do with direction.All a trader can gather from this is the understanding that the probability of a volatile pair to increase or decrease an X amount in a Y period of time, is more than the probability of a non-volatile pair. Another important factor is, volatility can and does change over time, and there can be periods when even highly volatile instruments show signs of flatness, with price not really making headway in either direction. Too little volatility is just as problematic for markets as too much, we uncertainty in excess can create panic and problems of liquidity. This was evident during Black Swan events or other crisis that have historically roiled currency and equity markets. Read this Term, which is likely to result in higher than normal volume of trades.