Australia Intends to Update its Trading Regulations

ASIC Seeks Industry Feedback on Proposed Modernization of Market Integrity Rules

The Australian Securities and Investments Commission (ASIC) has announced a consultation on proposed changes to modernize market integrity rules (MIRs) governing market participants' trading systems and automated trading. The consultation paper, titled "Proposed amendments to the ASIC market integrity rules: Trading systems and automated trading" (CP 386), is part of ASIC's focus on streamlining the MIRs.

CP 386 aims to align the ASIC rules framework with the International Organisation of Securities Commission principles and international best practice on algorithmic trading. The proposed changes aim to streamline and reduce complexity by applying consistent rules to any trading systems used by participants.

ASIC invites participants to suggest which rules they would like ASIC to prioritize for review. The regulator is also seeking feedback on ways to simplify and improve the MIRs. ASIC plans to repeal some obsolete rules and reduce complexity as part of this focus, including repealing the automated order processing annual notification to ASIC requirement.

One of the key proposed changes is the extension of principles-based rules for trading systems to participants' development, testing, use, and monitoring of their trading algorithms. ASIC also proposes to require 'kill switches' to enable immediate suspension of aberrant trading algorithm activity.

Approximately 85% of all trading in Australian listed equities markets is algorithmic trading, while about 94% in SPI 200 futures trading and 46% in three-year Treasury bond futures trading. These proposed changes are expected to have a significant impact on the industry.

ASIC welcomes feedback from industry on the proposed changes by 22 October 2025, and submissions should be sent to [email protected]. The consultation period for CP 386 ends on the same date.

ASIC will provide a conditional class no-action position from this requirement to securities participants for annual notifications due from November 2025. The proposed changes also aim to harmonize trading system rules and safeguards across the securities and futures markets, ultimately aligning ASIC's rules with international best practice.

CP 386 is a consultation paper released by ASIC, and ASIC expects feedback from market participants in October 2025 regarding the proposed rule changes. The proposed changes are a significant step towards modernizing the MIRs and ensuring they remain relevant and effective in the rapidly evolving digital trading landscape.

Australia Intends to Update its Trading Regulations