The Australian Securities & Investments Commission has agreed to hold off on several possible changes to equity market trading rules, in the wake of concerns expressed by market participants and market manager ASX Limited.
Yesterday's announcement sets in stone what Australian Securities Exchange chief executive Elmer Funke Kupper and ASIC chairman Greg Medcraft told the recent Stockbrokers Association of Australia conference, most particularly that ASIC would not insist on reducing tick sizes and a minimum "resting time" for high-frequency trading orders.
Both proposals had been at the discussion stage only.
A further proposal setting a minimum size for what are called "dark orders" also has been shelved for the same reason.
High-frequency trading is a global phenomenon, a hi-tech form of day-trading that exploits minimal price differentials between different markets and invariably ends up square at the end of every trading day.
"Dark pool trading" is the growing practice of having an off-market transaction venue in stocks, designed to allow major players to get in and out of big stock parcels without creating a splash in the overall "lit" market.
Both are legal -- indeed, the ASX runs its own dark pool -- and both have caused varying degrees of heartburn among market managers as our local market adjusts to their presence.
HFT has made limited progress in Australia because of the small trading levies imposed by ASX.
The regulator, however, will go ahead with new rules on crossing transparency and disclosure, on a higher level of trade reporting, and on higher levels of conflict-of-interest obligations.
ASIC commissioner Cathie Armour said: "ASIC's taskforces on high-frequency trading and dark liquidity, and earlier work over the past two years, has seen an improvement in the awareness of these areas of trading, hence the move not to proceed with some rules at this time."
