The corporate watchdog ASIC (Australian Securities and Investments Commission) has decided on a deeper review of risk management at the ASX following the equity market outage in September.
ASIC says the outage highlighted the fact that the ASX’s trading system remains pivotal to the functioning of Australia’s equities markets.
A hardware failure stopped trading for most of September 19, a Monday. Brokers couldn’t get enough traction in the market to close major trades for clients in the short window that all stocks were available.
A report on ASIC’s review of the outage says a lack of confidence resulted in trading drying up, with very little liquidity shifting to Chi-X’s competing market.
“Well-functioning financial market infrastructure is critical to the integrity and reputation of the Australian equity market and the trust and confidence investors have in it,” says ASIC commissioner Cathie Armour.
ASIC’s review found that the ASX broadly adhered to its procedures for incident management.
However, ASIC has decided to launch in 2017 a wider review of the operational and technological risk management arrangements at the ASX.
“The pace, complexity and dynamic nature of the Australian market and the important role of market infrastructure in its integrity and reputation continues to grow and evolve,” says commissioner Armour.
“ASX Group is embracing these developments with an expansive technology investment agenda.”