Modernizing Australia's Trade System Regulations
The Australian Securities and Investments Commission (ASIC) has announced proposed changes to its market integrity rules (MIRs), aiming to simplify and improve the rules governing trading systems and automated trading. The consultation paper, titled "Proposed amendments to the ASIC market integrity rules: Trading systems and automated trading" (CP 386), seeks to align ASIC's rules framework with international best practices on algorithmic trading and keep pace with technology, including artificial intelligence (AI).
ASIC estimates that algorithmic trading in Australian listed equities markets comprises approximately 85% of all trading. The proposed changes aim to extend the principles-based rules for trading systems to participants' development, testing, use, and monitoring of their trading algorithms.
CP 386 sets out proposals to amend the obligations in the ASIC Market Integrity Rules (Securities Markets) 2017 and the ASIC Market Integrity Rules (Futures Markets) 2017. One of the key proposals is to require 'kill switches' to enable immediate suspension of aberrant trading algorithm activity.
The changes also aim to harmonize trading system rules and safeguards across the securities and futures markets. In SPI 200 futures trading, about 94% of trading is algorithmic, and in three-year Treasury bond futures trading, it's approximately 46%.
ASIC invites feedback from industry on the proposed changes and encourages participants to suggest which rules they would like prioritized for review in the proposed changes. Submissions should be sent to [email protected] by 22 October 2025.
The proposed changes aim to modernize MIRs governing market participants' trading systems and automated trading, with the ultimate goal of streamlining and reducing complexity by applying consistent rules to any trading systems used by participants. The changes also aim to align ASIC's rules with the International Organisation of Securities Commission principles and international best practice on algorithmic trading.
ASIC's consultation process is an important step towards ensuring that the MIRs remain relevant and effective in the rapidly evolving world of algorithmic trading and AI. The commission welcomes the opportunity to engage with industry stakeholders and receive feedback on the proposed changes.
