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.

"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.

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.