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Thursday, March 7, 2024

8,417 of Transparency Errors Cost ASX over $1 Million

The
Australian Securities and Investments Commission (ASIC ↗) has imposed a $1.05
million penalty on ASX Limited, the operator of the Australian Securities
Exchange, for failing to provide adequate pre-trade transparency on its trading
platform. This marks the first time ASIC has issued an infringement notice to a
market operator.

ASX Fined $1.05 Million
for Lack of Order Transparency

According
to ASIC
, ASX breached the Market Integrity Rules on 8,417 occasions between
April 2019 and December 2022 by not making certain order information available
on its trading system. The rules require market operators to disclose details, such as order volume and price to ensure price formation, liquidity, and enable
investors to assess investment opportunities.

The issue
stemmed from an incorrect system configuration that exempted certain equity
market products from pre-trade transparency requirements, even though the transaction
consideration did not meet the $200,000 threshold for exemption. ASIC noted
that ASX failed to identify and rectify the problem despite being alerted by a
market participant on at least two occasions before December 2022.

While
acknowledging that ASX took immediate steps to remedy the issue once aware,
ASIC ‘s Chairman, Joe Longo, emphasized the importance of maintaining confidence in
market operators.

ASX Limited has paid a $1,050,000 penalty for an order information transparency failure, the first time ASIC has issued an infringement notice to a market operator https://t.co/JoxiAoVKMi ↗#markets ↗ pic.twitter.com/JbXk305U6z ↗

— ASIC Media (@asicmedia) March 6, 2024 ↗

“Technology
and operational resilience for market operators is a strategic enforcement
priority,” Longo said. “ASIC will continue to take action to ensure that market
operators and market participants have robust systems, controls and
technological infrastructure in place to support Australia’s capital markets.”

ASIC found
that the circumstances surrounding the system configuration issue were
indicative of carelessness rather than intentional misconduct. However, the
regulator considered the consequences of the incorrect configuration and ASX’s
failure to detect and escalate the issue as aggravating factors in determining
the penalty.

The
infringement notice and payment of the penalty do not constitute an admission
of guilt or liability by ASX. The matter is separate from ASIC’s ongoing
investigation into the ASX
CHESS Replacement Program
.

ASIC’s Comprehensive
Crackdown on Financial Malfeasance

ASIC has
recently reported significant progress in its ongoing battle against investment
scams and financial misconduct. Since the initiation of its enhanced scam
detection capabilities in July 2023, ASIC has successfully shut down
approximately 3,500 fraudulent investment websites ↗.

In a
related development, the regulatory body has taken decisive action against
Prospero Markets, a firm implicated in a $229 million money-laundering
operation
. Prospero, known for providing derivatives and foreign exchange
contracts to both retail and wholesale clients, faced accusations of violating
its Australian Financial Services License conditions and the Corporations Act.

We have applied to the Federal Court to wind up retail #OTC ↗ derivative issuer Prospero Markets to secure the efficient return of client funds. Our investigation follows former officers and responsible company managers being charged with money laundering https://t.co/3T6bUqetoL ↗ pic.twitter.com/IrbF3J0ZnN ↗

— ASIC Media (@asicmedia) March 1, 2024 ↗

This
follows an investigation by the Australian Federal Police into the Changjiang
Currency Exchange, suspected of laundering substantial sums for criminal
networks. ASIC’s proactive stance included suspending Prospero’s AFS Licence in
December 2023 due to the company’s failure to submit its audited financial
statements for the year
.

Furthermore,
ASIC has obtained a bankruptcy order against Tyson Scholz, a prominent social
media influencer trading under the nickname “ASX Wolf,” ↗ for his
non-compliance with a court order to pay AU$456,296.64.

The
Australian Securities and Investments Commission (ASIC ↗) has imposed a $1.05
million penalty on ASX Limited, the operator of the Australian Securities
Exchange, for failing to provide adequate pre-trade transparency on its trading
platform. This marks the first time ASIC has issued an infringement notice to a
market operator.

ASX Fined $1.05 Million
for Lack of Order Transparency

According
to ASIC
, ASX breached the Market Integrity Rules on 8,417 occasions between
April 2019 and December 2022 by not making certain order information available
on its trading system. The rules require market operators to disclose details, such as order volume and price to ensure price formation, liquidity, and enable
investors to assess investment opportunities.

The issue
stemmed from an incorrect system configuration that exempted certain equity
market products from pre-trade transparency requirements, even though the transaction
consideration did not meet the $200,000 threshold for exemption. ASIC noted
that ASX failed to identify and rectify the problem despite being alerted by a
market participant on at least two occasions before December 2022.

While
acknowledging that ASX took immediate steps to remedy the issue once aware,
ASIC ‘s Chairman, Joe Longo, emphasized the importance of maintaining confidence in
market operators.

ASX Limited has paid a $1,050,000 penalty for an order information transparency failure, the first time ASIC has issued an infringement notice to a market operator https://t.co/JoxiAoVKMi ↗#markets ↗ pic.twitter.com/JbXk305U6z ↗

— ASIC Media (@asicmedia) March 6, 2024 ↗

“Technology
and operational resilience for market operators is a strategic enforcement
priority,” Longo said. “ASIC will continue to take action to ensure that market
operators and market participants have robust systems, controls and
technological infrastructure in place to support Australia’s capital markets.”

ASIC found
that the circumstances surrounding the system configuration issue were
indicative of carelessness rather than intentional misconduct. However, the
regulator considered the consequences of the incorrect configuration and ASX’s
failure to detect and escalate the issue as aggravating factors in determining
the penalty.

The
infringement notice and payment of the penalty do not constitute an admission
of guilt or liability by ASX. The matter is separate from ASIC’s ongoing
investigation into the ASX
CHESS Replacement Program
.

ASIC’s Comprehensive
Crackdown on Financial Malfeasance

ASIC has
recently reported significant progress in its ongoing battle against investment
scams and financial misconduct. Since the initiation of its enhanced scam
detection capabilities in July 2023, ASIC has successfully shut down
approximately 3,500 fraudulent investment websites ↗.

In a
related development, the regulatory body has taken decisive action against
Prospero Markets, a firm implicated in a $229 million money-laundering
operation
. Prospero, known for providing derivatives and foreign exchange
contracts to both retail and wholesale clients, faced accusations of violating
its Australian Financial Services License conditions and the Corporations Act.

We have applied to the Federal Court to wind up retail #OTC ↗ derivative issuer Prospero Markets to secure the efficient return of client funds. Our investigation follows former officers and responsible company managers being charged with money laundering https://t.co/3T6bUqetoL ↗ pic.twitter.com/IrbF3J0ZnN ↗

— ASIC Media (@asicmedia) March 1, 2024 ↗

This
follows an investigation by the Australian Federal Police into the Changjiang
Currency Exchange, suspected of laundering substantial sums for criminal
networks. ASIC’s proactive stance included suspending Prospero’s AFS Licence in
December 2023 due to the company’s failure to submit its audited financial
statements for the year
.

Furthermore,
ASIC has obtained a bankruptcy order against Tyson Scholz, a prominent social
media influencer trading under the nickname “ASX Wolf,” ↗ for his
non-compliance with a court order to pay AU$456,296.64.

Kaylie Pferten
Kaylie Pferten
A pilot of submersible crafts in a former life, now married to my husband David and writing about investment advice.

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