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Supervision and Regulatory data

Tuesday 15 May 2018


Regulatory data is important to the Australian Securities and Investments Commission (ASIC), to market participants, and to the integrity of the market.

Daryl Harvey, part of the Market Supervision team at ASIC, spoke to Market Integrity Liaison meeting attendees about regulatory data and the role it plays in market supervision.

Attendees were reminded that the requirement for regulatory data has been embedded in market integrity rules since 2014, and ASIC expects compliance.

The focus of Harvey’s presentation was the origin of order component, which is the unique client identifier required to be attached to all orders and trade reports to the market.
The requirements must be:

  • unique;
  • consistent; and
  • meaningful.

“ASIC uses regulatory data every day. We use it to conduct the real-time surveillance that my team does, we use it to detect and investigate market abuse, and we use it to analyse market structure and trends,” he explained.

An example of this work is in the review ASIC did into market cleanliness that addresses insider trading and information leakage ahead of ‘material price-sensitive announcements’.

ASIC’s monitoring puts them in a position to see any trading activity that is not quite right.
Regulatory data has shown that information leakage has actually decreased over time and there has been an overall improvement in market cleanliness.

“The introduction of regulatory data market supervision has also halved the number of notices for our regulatory population.”

Harvey added that requests are more targeted and less frequent, which means market participants can spend less time responding to those notices, as well.


Data quality and the right data
Data supervision is only as good as the data ASIC receives.

“Incorrect data impedes informed decision-making, affects market integrity, and causes us to issue more notices, which, in turn, forces you to spend more time responding to those notices.”

Harvey did acknowledge that there are times when compliance is challenging but suggested that this should be the exception, rather than the rule.

He continued that ASIC would not accept inadequate systems as an appropriate excuse for non-compliance; thus, it is up to market participants to have the right systems in place and to ensure the relevant data is provided.

The regulator will be working with market participants to help them improve data quality.
Important to note, however, is that there is a $1 million fine attached to the market integrity rule supervisions for regulatory data.