ASIC Runs After Insider Traders
The Australian Securities and Investment Commission (ASIC) is making renewed efforts against insider trading by launching a number of cases involved leaked information during the merger and acquisition phase of businesses.
An indicator of how serious the regulator is in its battle against insider trading is the guilty plea in July of Hanlong Mining Executive Calvin Zhu to three insider trading charges for 2006 transactions. ASIC also slapped construction contractor Leighton a $300,000 for the firm's failure to disclose market issues problems as soon as the company became aware of them.
To further provide more protection to markets, ASIC proposed new rules that would force brokers to tighten controls over automatic trading. Among the proposal is to require brokers to gain direct control over algos, or algorithm-based trades, suspend orders and systems, and subject the systems to review at least once a year.
A penalty of A$1 million will be slapped on violators of the new rules.
The ASIC said that since its full control of market supervision from the Australian Stock Exchange two years ago, it has acted swifter on investigations of insider trading. ASIC Deputy Chairwoman Belinda Gibson pointed out that majority of market integrity probes are under way within two months after its sharemarket watchers refer the matter to the regulator's enforcement unit.
Ms Gibson said algorithm trading continues to be of concern to ASIC. She said the proposed new rules will strengthen market protection against algos disruption seen in other markets.
The other markets, such as Hong Kong, proposed guidelines to mandate regular testing of automatic trading systems as part of the financial regulator's crackdown.