ASIC Issues New Regulation Due to Coronavirus Outbreak

ASIC issues new regulations to ensure the stability of the Australian equity market due to the coronavirus epidemic. Equity market participants will have to reduce the number of their executed trades up to 25% compared to the levels executed on Friday.

17 March, 2020 | AtoZ Markets – Scientists around the world are racing to unlock the secrets of the COVID-19 virus in search of a vaccine. However, the number of confirmed cases of coronavirus continues to increase. Australia has approximately 300 confirmed cases of COVID-19 and five people died. The government has declared that anyone arriving from abroad will have to isolate themselves for two weeks.

ASIC Restricts Trade Execution

The Australian Securities & Investments Commission (ASIC) announced new regulations to ensure the resilience of Australian equity markets due to the coronavirus outbreak. These measures are part of the Australian government’s response to the coronavirus (COVID-19).

In the past two weeks, the Australian equity market has experienced record trading volumes. ASIC, and other agencies of financial regulators, have been closely monitoring the financial markets to ensure that they are maintaining order. Australian markets have remained strong during this volatile period. The measures are aimed at preventing disruption and maintaining standards.

The Australian equity markets experienced an exponential increase in the number of trades executed, compared to last Friday, March 13, 2020. There were no disturbances in the functioning of the market at that time. But there is a critical work backlog for the exchanges and the trading participant during the weekend. If these numbers continue to rise, this will strain the risk management capabilities of market infrastructure and market participants.

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ASIC Asks Equities Traders to Cut Volumes by 25%

ASIC has instructed equity market participants, under ASIC market integrity rules. It required these participants to limit the number of trades executed every day until further notice.

These companies will have to reduce the number of their executed transactions up to 25% compared to the levels executed on Friday. This will require large volume participants and their customers to manage their volumes actively. The limits, however, are not expected to affect the ability of retail consumers to execute trades.

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